England and Wales High Court (Chancery Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(Mr Justice Jacob)

		Royal Courts of Justice Strand London WC2
		20th January 2000

1. LORD JUSTICE ROBERT WALKER: This is an appeal, for which this court granted permission at the beginning of the hearing, from an order of Jacob J made on 14th January 1999. The order granted an interim injunction restraining the defendant, Associated Newspapers Limited, ("Associated Newspapers") until trial or further order "from publishing distributing or causing enabling or assisting others to publish or distribute any newspaper magazine or other periodical under or by reference to the name METRO or any other name colourably similar thereto in the area within the distance of 15 miles of Piccadilly Station, Manchester."
2. The claimants are three companies, Guardian Media Group Plc, Greater Manchester Newspapers Limited and Manchester Morning News Limited ("the Manchester Group"). The multiplicity of claimants is explained by the need for a solid undertaking in damages.
3. The Manchester Group publishes the well-known Manchester Evening News, but the Group have for more than 10 years also published and distributed free a weekly newspaper, the correct full title of which is now Manchester Metro News. This paper is distributed mainly in prosperous suburbs to the south of Manchester, including Altrincham, Wilmslow and Stockport, by delivery to peoples' homes on Friday.
4. The judge described the newspaper in the following terms, which are taken from an approved transcript of his judgment:

"It began life in 1987 or 1988. Initially the masthead read 'Manchester Evening News Metro', the 'Metro' being given much the greater prominence. The reference to the Evening News disappeared by 1988 [I interpose that that seems to be not entirely correct] and from then on the masthead with variants so insignificant as not to count read 'METRO' in very big letters with 'Manchester' and 'News' floating in much smaller letters above and below the big lettered METRO. The newspaper has a circulation of about 300,000 and is delivered to households in the Manchester area, particularly the wealthier areas of Manchester. There can be no doubt that this newspaper in the ten years in which it has been operating in Manchester has acquired a significant reputation."

5. The evidence in fact showed that a tiny fraction of the circulation, less than one-tenth of one per cent, is sold at outlets in Central Manchester or in Salford. However, neither side based anything on that minute number of copies which were sold.
6. The judge then recorded the claim made by the Manchester Group to have very substantial goodwill in the name "Metro" in the Manchester area. Their evidence was that the name is well-known to members of the public, to advertisers, and to those concerned with placing advertisements. Even for a free newspaper, which derives its revenue wholly from advertising, recognition by the public, as well as by advertisers, is obviously important, because advertisers are interested in the size and character of any newspaper's readership. The Manchester Group's free weekly newspaper has won trade awards in 1997, 1998 and 1999. Its masthead has for many years included the slogan "Britain's Biggest Free Newspaper".
7. Associated Newspapers is a well-known newspaper publisher, its best known publications being the Daily Mail, the Mail on Sunday and the Evening Standard. In March 1999, after nearly two years planning and preparation, it launched a new venture which has been very successful; that is, a free daily newspaper to be distributed to commuters in the London area, at railway stations, tube stations and so on. Associated Newspapers chose the name "Metro London" for its new venture, the word "Metro" being more prominent on the masthead and being used on its own within the newspaper for items such as Metro Weather, Metro Travel Watch and so on. I comment at this point that the judge observed, I think correctly, that "Metro" is a distinctly unusual name for a newspaper in contrast to other words (such as Times, Observer, Express, and so on) which are found in the titles of both national and many local newspapers.
8. It is not suggested that Associated Newspapers set out with any intention of misappropriating a name known to be used by competitors. On the contrary, the judge recorded the evidence on behalf of Associated Newspapers in the following terms:

"The defendants say that they took particular care when they chose the name 'Metro' to ensure that it was clear for use throughout the country. They always envisaged that the London version of their Metro newspaper would be followed by Metros in other parts of the country and searches were done. The fact that the claimants were using Metro as part of their newspaper name did not emerge as a result of those searches. That may well be because the search technique used did not always have the ability to throw up the word 'Metro'. Computers can look for 'Metro' but they can only look for 'Metro' in a computer data base. The particular listing of newspapers and the like, a publication called [Willings Press Guide] only had the full title of the claimant's newspaper, 'Manchester Metro News'. The search [in April 1998] did not throw up the existence of that newspaper and those concerned in the defendants with their Metro project were not aware of the Manchester local newspaper, even though it had won all those awards which are referred to in the evidence. ... It is unfortunate that the search did not reveal the use of the name 'Metro' and it is perhaps surprising, because by 1999 the Metro paper of the claimants was producing advertising revenue of £5.4 million a year."

9. The chronology recorded in the judgment, and there is an issue as to whether it is complete enough to give a true picture, is that on 10th November 1999 the Manchester Group learned of Associated Newspapers' intention to launch a Manchester version of its free daily newspaper, and that it came out on Friday, 12th November 1999 under the name of Metro Northwest. This was, according to the evidence of Mr. Kass, the legal director at Associated Newspapers, six days after Mr Kass had become aware of the name of the Manchester Group's free weekly. It appears, therefore, that Associated Newspapers acted with its eyes open but that its eyes, on that evidence, were opened only at a late stage.
10. The Manchester Group had already, in July 1999, announced its plan to launch its own daily free newspaper distributed at public transport centres, and the Manchester Group accelerated that launch so as to coincide with Associated Newspapers' launch in Manchester. Associated Newspapers described this as a mere spoiler, but the judge did not accept that that was 'quite right'. That way of putting it allows for some element of a spoiler. The Manchester Group's new free daily was called Manchester Metro News, with the "Metro" being dominant. The outcome has been that since the middle of last November, and until the present time, there have been two free dailies, both being distributed at railway stations, tram stations and other transport centres in the Manchester commuter area; that is, Associated Newspapers' Metro Northwest, containing mainly national and international news and carrying national advertising, but in a Manchester edition which gives prominence to local items, and the Manchester Group's Manchester Metro News, containing mostly local news but some national news and carrying mainly local advertising. The evidence indicates that in 1999 about 10% of the Manchester Group's weekly free paper's advertising was advertising which should be classified as national advertising.
11. It has not been suggested that, apart from the names, there was any particular similarity in get-up between the two publications, although of course a stressed and half awake commuter may be inclined to act like a 'moron in a hurry', in the phrase used by Foster J in Morning Star Co-operative Society v Express Newpapers [1979] FSR 113, 117. There is, however, a strong likelihood of confusion, in that both are distributed at transport centres by agents clad in each case in bright yellow jackets. Mr John Baldwin QC, appearing with Mr Adrian Speck for Associated Newspapers, has rightly criticised a statement in a witness statement of Mr. David Benjamin, a director of the third claimant, to the effect that Associated Newspapers copied the Manchester Group's method of distribution for its daily free paper. The fact is that the Manchester Group was copying a distribution method which Associated Newspapers has been using in London successfully for months.
12. The Manchester Group complained to Associated Newspapers about its new Metro Northwest within two days of 12th November 1999. A letter before action was written on 16th November, and the matter came before the Chancery Division of the High Court on 6th December 1999. However, there was no effective hearing of the application for an interim injunction until the hearing on 14th January, which I have already mentioned. The application was not treated as vacation business, although this hearing in the Court of Appeal has been expedited.
13. After stating the facts in the way that I have indicated, the judge referred to the essentials of actionable passing off, noting that one of the essentials, goodwill, could be localised. He referred to American Cyanamid principles (see American Cyanamid v Ethicon [1975] AC 396), and he said:

"But in passing off the questions of damage and likelihood of damage are intimately bound up with the strength of the cause of action itself. The more that deception and confusion is likely the stronger the case but also the more the unquantifiable damage that the claimant is likely to suffer. So, as it seems to me, in the ordinary run of passing off cases -- and to some extent this is the ordinary run of passing off case -- an interlocutory injunction would only be granted where the claimant can show significant likelihood of damage to his goodwill, i.e. significant likelihood of deception or confusion. I approach this case on that basis."

14. Mr. Baldwin has not taken any serious issue with that general statement of principle, and Mr. Michael Bloch QC (appearing with Mr Ian Purvis for the Manchester Group) has suggested that it is, if anything, somewhat favourable to Associated Newspapers.
15. The judge then referred to the facts. He acknowledged that the two newspapers had different names and mastheads but said that there was evidence of confusion already, and that there was, in his words, very substantial potential for confusion. He was referring to confusion both among advertisers and among members of the public. He concluded that there was what he termed a plain case of passing off. He said that it was impossible to quantify the damage likely to be caused to the Manchester Group between the hearing before him and the eventual trial if no injunction were granted. As to possible damage to Associated Newspapers, if an injunction were wrongly granted, he said this:

"I am conscious, as I say, that the injunction will have the effect if wrongly granted of putting the defendants in the difficulty of having to change their name or stop in Manchester and then come back to a new name or restart. But in the end I do not think that damage is quite as self-evidently destructive as it might seem. They are continuing a programme of bringing out Metro newspapers in other towns. They have done it now in Birmingham, somewhere in Scotland [that was Edinburgh and Glasgow] and Newcastle. It does not really seem to me to be particularly difficult to tell advertisers that you have got a newspaper of the same sort but another name and what its circulation is in Manchester too. Reliance was also placed on the difficulty of changing the name 'Metro' just for the Manchester version, but already they have changed the version anyway as between different towns. And, so far as everything is contained in a computer, it is work of very short order to change the name of various bits of text. The real change that is sought is calling the newspaper 'Metro' or 'Metro Northwest' and that seems to me to be the appropriate thing to be done pending trial."

16. The judge granted an interim injunction in the terms which I have already read out. He also gave directions for a speedy trial. He ordered Associated Newspapers to pay half the costs of the hearing, the other half being made costs in the case. The trial is listed for 5th May next with an estimated duration of five days.
17. There are well-known and well-defined limits to the function of an appellate court in reviewing a judge's exercise of discretion to grant or withhold an interim injunction. Associated Newspapers' draft notice of appeal contains eight paragraphs of substantive grounds, as well as an introductory and a final paragraph, but, as developed by Mr. Baldwin in his clear submissions, it can, I think, fairly be summarised as raising four main points in challenging the judge's exercise of his discretion. They are as follows. First (paragraph 3 of the notice of appeal) that, despite his reference to it, the judge paid too little attention to American Cyanamid principles and gave too much weight to the view which he formed as to the likely outcome at trial. Second (in paragraph 4) the judge erred in forming the view that it was, as he put it, a plain case of passing off. He erred because he overlooked (paragraph 5) significant differences between Associated Newspapers' new publication and the Manchester Group's longstanding weekly publication, and he failed to distinguish clearly between the latter, and the Manchester Group's new daily publication and its method of distribution. The third point (in paragraphs 2, 6, 7 and 8) is that the judge failed to make a correct assessment of the likely consequences in terms of damage to one side and the other of either granting or refusing interim relief, with the result that Associated Newspapers would suffer a serious commercial disadvantage, and the Manchester Group would obtain an unfair commercial advantage by stealing a march on its competitor. On that point, and also to some extent on the second point, Associated Newspapers relied on the decision of Sir Nicolas Browne-Wilkinson VC in Nationwide Building Society v Nationwide Estate Agents [1987] FSR 579. Fourth and finally (in paragraph 9) the draft notice of appeal challenges the judge's statement that it was accepted that Manchester Group had acted promptly to claim interim relief.
18. I take these four main points in that order. The American Cyanamid principles have a degree of flexibility and they do not prevent the court from giving proper weight to any clear view which the court can form at the time of the application for interim relief (and without the need for a mini-trial on copious affidavit evidence) as to the likely outcome at trial. That is particularly so when the grant or withholding of interim relief may influence the ultimate commercial outcome. It is not necessary to consider today whether the court's entitlement to give effect to its provisional view of the merits goes quite so far as Laddie J sought in Series 5 Software v Clarke [1996] 1 All ER 853. In the end, there was not any significant difference between counsel on that point.
19. By way of introduction to the next two points, it is convenient to refer to the Nationwide case. That is the decision of the Vice Chancellor which was cited to the judge and as to which he confessed he did not find it easy to follow the Vice Chancellor's exercise of his discretion. That case occurred at a time when the law relating to building societies was changing radically so as to extend the activities in which building societies could lawfully engage. The claimant building society had been called Nationwide since 1970. It had numerous branch offices and numerous agencies at others' offices, including the offices of estate agents, but it did not and could not lawfully, until 1st January 1987, trade as an estate agent. It had plans to do so as soon as the new law came into force. In October 1986 the defendants opened four branches of an estate agency in Bristol under the name Nationwide Estate Agents. In November 1986 the building society sued for passing off and applied for interim relief. The defendants gave undertakings, until the hearing of the application for interim relief, not to use "Nationwide" except in relation to the four Bristol branches. That, as the Vice Chancellor put it, sterilised the future growth of the defendants' business, which, on their case, would in due course have grown until it became truly nationwide. The application for interim relief was not heard until June 1987, a fact which suggests that some progress at least has been made in the last decade in dealing with applications for interim relief in the Chancery Division. By then, the building society had for over five months enjoyed its new statutory power to trade as an estate agent, and it was vigorously exercising that power. By then, as the Vice Chancellor said, the claimant had goodwill in its estate agencies but (see page 585), it was goodwill limited to five months' trading after the issue of the writ. The state of a claimant's goodwill must be judged, not at the date of issue of the writ, unless the writ is issued with quite extraordinary promptitude, but at the date of commencement of the activity, on the part of the defendant, that is complained of (see the decision of the Privy Council in Cadbury Schweppes v Pub Squash Company [1981] 1 WLR 193, 204, [1981] RPC 429,494).
20. As I understand it, the Vice Chancellor's exercise of discretion in the Nationwide case against granting an injunction was arrived at by the following steps. First, before 1987 the building society had goodwill in the name "Nationwide" for its business as a building society, but not for the business of estate agents because there was no such business. Second, however, the business of estate agents is associated with that of a building society, in that both are concerned with house purchase (see the Vice Chancellor's judgment at pages 587 to 588), and because of the association there was a very great probability of confusion, which would have been prejudicial to the building society's goodwill in its business as a building society. Third, other things being equal, therefore, the building society would have obtained an interim injunction. But, fourth, in the special circumstances of the case, to grant an interim injunction would be unfair, because it would operate to protect not only the goodwill of the building society business, which was entitled to protection, but also the new estate agent's business launched after the writ (and not therefore entitled to protection). So an injunction would not be granted unless the building society was prepared, as it was not prepared, to give an undertaking until trial on its own behalf that it would not itself use the name "Nationwide" for its new estate agent's business. So either both competitors were to be tied to the starting gate until trial or neither was.
21. The parallel in the present case depends on the view that the Manchester Group's launch of a new free daily morning newspaper, distributed by agents in yellow jackets at transport centres in Manchester, should be regarded as an essentially different business from its business of publishing a free weekly paper distributed to readers' homes on the south side of the city. That is, as both Mr. Baldwin and Mr. Bloch were disposed to agree, a question of fact and degree.
22. Unlike the judge, I do not find it difficult to understand the Vice Chancellor's exercise of discretion in the Nationwide case. I think that it showed a keen appreciation of the commercial realities and of the need, on any particular set of facts, to identify what goodwill is entitled to protection. But I agree with the judge that what the Manchester Group were planning to do was, as the judge put it, much more closely related to what they were already doing. Their goodwill was as publishers of newspapers circulating in the Manchester area, and the accelerated launch of their new paper was in the same commercial field and in the same geographical area. I do not therefore consider that the judge erred in principle in exercising his discretion by reason only that he did not take the course which the Vice Chancellor had taken in the Nationwide case, since the factual situations, although comparable, were by no means identical. The judge might have spelt out that point even more clearly. That is a criticism that can often be made of extempore judgments. But it seems reasonably clear that he did have well in mind the differences, especially in distribution methods, between the Manchester Group's existing free weekly and its new free daily. I say that because he said in his judgment:

"... it seems to me that the public in Manchester who are used to their Metro coming through the letter box on Friday mornings when they are handed a newspaper called 'Metro' at the station are very likely to think these two are coming from the same publishers, the same outfit."

23. The judge also said a little later that it mattered not at all if the confusion was between Metro Northwest and the Manchester Group's new free daily rather than between Metro Northwest and the Manchester Group's long-established free weekly. Mr. Baldwin has criticised the judge for that observation. But if the judge was right in his provisional view as to the nature and extent of the goodwill for which the Manchester Group were entitled to protection, then his observation was correct, and was not, it seems to me, in conflict with the undisputed principles stated by the Privy Council in the Pub Squash case. A fuller investigation at trial may lead to a different view, but at present I see no reason to differ from the judge's provisional view as to the nature and extent of the Manchester Group's goodwill.
24. Mr. Baldwin also attacked the judge's provisional findings about actual instances of confusion and the likelihood of confusion. There is force in Mr Baldwin's criticism of the market research which seems to have been hastily commissioned by the Manchester Group. However, the judge does not seem to have relied on that. It may be right that the real customers for a free paper are the advertisers and that advertisers are fairly sophisticated. Nevertheless, some degree of confusion amongst advertisers seems likely, and indeed almost inevitable, if there continue to be two free daily Metros distributed in Manchester. That is so whether or not the judge was right in referring, as he did, to a significant overlap in the content of Associated Newspapers' Metro Northwest, on the one hand, and the Manchester Group's newspapers on the other hand, both in terms of editorial content and in terms of advertising. I accept Mr. Bloch's submission that there is no precise or generally accepted definition of what a local paper constitutes, and that the judge's comment about Metro Northwest, that "it is seen as a local paper, it is intended to be seen as a local paper at the moment", does not betray any fundamental misunderstanding. I fully understand that Mr. Kevin Beatty (the managing director of Associated London Metro Ltd) sees Associated Newspapers' Metro concept as something to be rolled out nationwide wherever there are metropolitan commuters. But there is, nevertheless, a clear link, both in the title and in the selection and arrangement of the content, with a particular metropolis or conurbation, in this case Manchester.
25. Closely connected with the issue of confusion, and equally important, is the issue of likely damage. Mr. Baldwin has vigorously submitted that there is after two months no real evidence of damage suffered by the Manchester Group, and certainly no irreparable damage. Mr. Bloch has answered that it is easy to describe unquantifiable damage as speculative, and that where a competitor starts trading under the claimant's name or mark the court does not need much evidence to form a provisional view that damage must have been caused by the confusion and that further damage must be expected in the future if the use continues.
26. In my judgment, the judge was entitled to reach the provisional view that he did, both as to the likelihood of damage and as to its being unquantifiable. He also considered the risk of unquantifiable damage to Associated Newspapers if an injunction were wrongly granted. Mr Baldwin has criticised that part of his judgment, which I have already read out, as minimizing the importance to Associated Newspapers of a single nationwide brand name. I fully understand that as an aspiration, but it appears that it will not now be achievable unless Associated Newspapers is successful at trial. That covers what I have termed the second main point and part of the third main point raised in the draft notice of appeal and in Mr. Baldwin's submissions.
27. In summary, on the American Cyanamid test there is at least an arguable case to go to trial, and damages are not an adequate remedy, not because either side is lacking resources, but because of the particular difficulty of quantification. There is also what Mr Baldwin called the balance of justice; that is, the need for the court, on any application for interim relief, to weigh the likely injustice to the claimant if an injunction is wrongly refused, against the likely injustice to the defendant if an injunction is wrongly granted, all that being on the basis that the true merits and entitlement to a final injunction can be established only at trial. The judge did address that issue in his judgment. Whether an appellate tribunal would have taken exactly the same view as the judge is immaterial unless the judge made an error of law or principle, or can be shown to have overlooked or misunderstood evidence which had an important bearing on the exercise of his discretion. The judge did, in the course of his extempore judgment, make a few questionable observations, to which Mr. Baldwin has drawn attention. But I am not convinced that any of them is of central importance to the exercise of the judge's discretion. I can understand and indeed feel some sympathy with the submission that there is at least a slight flavour of Nationwide about this case, even though the facts are different, and that the Manchester Group, having accelerated its launch and sent its yellow-jacketed troops into battle at Manchester Piccadilly and elsewhere on Friday, 12th November 1999, should have accepted the offer of a speedy trial and continued the commercial battle until then. However, the judge took a different view. I am not satisfied that he erred in law or in principle, or that he overlooked or misunderstood material evidence to a significant extent.
28. That leaves the final point as to the promptitude with which the Manchester Group complained and took legal proceedings. The evidence before the judge, in the form of several witness statements, some of which were still in draft and unsigned, did not give a clear and undisputed picture of when the relevant directors and executives of Associated Newspapers became aware of the existence and name of the Manchester Group's free weekly, or when the relevant directors and executives with the Manchester Group became aware of any definite decision by Associated Newspapers to launch a free daily in Manchester, of the likely date of the launch or, most importantly, of the proposed name. There was unsigned evidence from Mr. Ian Ashcroft, the managing director of the second claimant company, of a conversation at a high-powered conference held at Compiegne in France during the third week of September 1999, between himself and Mr Murdoch McLennan, the managing director of Associated Newspapers, and Mr Beatty. During this conversation Mr. McLennan mentioned the possibility of a joint venture in launching a free daily morning newspaper in Manchester, but nothing came of it, and it seems to be common ground that each side reserved the right to launch on its own. It seems, therefore, that the judge was wrong to say, as he did, that it was accepted that the Manchester Group complained promptly. The full picture as to the developing state of knowledge on either side will no doubt emerge at trial when the witnesses are cross-examined, but the written evidence before the judge does not disclose any substantial grounds for supposing the Manchester Group to have been guilty of undue delay.
29. For those reasons, despite Mr. Baldwin's clear and vigorous submissions, and despite my personal feeling that the decision which the judge had to make was perhaps more narrowly poised than the judge saw it, I would dismiss this appeal.
30. MR. JUSTICE SCOTT BAKER: I agree.
31. LORD JUSTICE HENRY: I also agree.

Order: Permission to appeal granted but appeal dismissed with costs.