England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		05/07/2011

Mr Justice Briggs:

INTRODUCTION

1. This judgment follows the liability-only trial of a claim for trade mark infringement and passing off in relation to products known as rigid composite intermediate bulk containers. I shall refer to them as "IBCs". They are used for the transportation and storage of liquids and pourable solids in quantities of the order of 1,000 litres. The IBCs in issue in these proceedings consist of three main components. The first is a metal cage consisting of a mainly welded but partly screwed-together lattice work of galvanised steel bars. The second component consists of a plastic bottle which occupies almost the whole of the space inside the cage, fitted with a filler cap at the top and a dispensing valve at the bottom. The third is a pallet, made of metal, plastic or wood, to which the cage is fastened, and which permits the IBCs to be moved around by a forklift truck and stacked, sometimes four high, in warehouses, on lorries or railway trucks. An IBC may, but does not always, have a fourth component, consisting of hardened plastic corner protectors which provide additional support and protection to the lower part of the bottle, beyond that provided generally to the bottle by the cage. Figure 1 below shows a typical IBC of the claimants' manufacture, using a metal pallet and fitted with corner protectors. The approximate external dimensions of the IBCs in issue are 1200 (l) x 1000 (w) x 1160 (h), and they weigh approximately 56 kg (when empty).

[Diagram or picture not reproduced in HTML version - see original .rtf file to view diagram or picture]
2. Inherent in the design and durability of an IBC is its capacity for being re-used, that is, re-filled with the same or different contents. Generally, the cage is likely to have a longer re-use life cycle than the bottle. Generally, a cage will wear out due to abrasions, knocks, or being dropped when being transported or moved within a user's premises. In stark contrast, the life cycle of the bottle will be critically dependent upon the nature of its contents. Some types of contents, such as specialist machine oils, are so sensitive to moisture that a used bottle may be inappropriate merely because it has been washed. Other types of contents, such as paints and some types of adhesive, may leave residues which make the subsequent washing and re-use of the bottle impracticable.
3. This mismatch in the typical re-useable life cycle of the cage and bottle of IBCs of the type in issue led to the development of a practice of "rebottling" i.e. the replacement in a used IBC of its existing bottle by a new bottle. Initially, rebottling consisted only of the replacement of the original bottle by another bottle of the same type, or at least from the same manufacturer, designed for use in the original cage. Since however the dimensions of 1,000 litre IBCs available from a number of the main manufacturers are substantially the same, the practice has more recently grown up of "cross-bottling" a used IBC by the replacement of its original bottle with a new bottle from a different manufacturer. It is this process of cross-bottling which has led to the present litigation.
4. The claimants are the leading manufacturers and suppliers of 1,000 litre rigid composite IBCs in the United Kingdom. They sell both new and used (invariably rebottled) IBCs into a market consisting primarily of businesses ("fillers") wishing to use them as containers for the sale of industrial liquids and pourable solids.
5. The first defendant Delta Containers Limited ("Delta") has, beginning in 2003, established a substantial business in the rebottling of used IBCs which, by the time of the emergence of the present dispute, consisted mainly of cross-bottling, including the cross-bottling of the claimants' used IBCs. The claimants display their name "Schütz" and a triangular device, both of which they have registered as trade marks, conspicuously on their cages and, but much less conspicuously, on their bottles.
6. The claimants say that when Delta cross-bottles and then sells a Schütz IBC with the bottle of another manufacturer it is infringing the claimants' trade marks in relation to both the bottle and the IBC as a whole. Further they claim that Delta's conduct is such as to pass off its cross-bottled IBCs as and for IBCs of the claimants. For passing off purposes, the misrepresentation inherent in Delta's conduct is said to lie in the creation of the impression, by the retention of the Schütz name on the cage, that the bottle inside it is manufactured by, or at least approved as a suitable bottle by, the claimants, and that the IBC as a whole is still a genuine Schütz product.
7. The first defendant's case, in a nutshell, is that the continued appearance of the claimants' trade marks on the cages which form part of Delta's cross-bottled IBCs constitutes no more than a legitimate use of the trade mark in relation to the cage alone, and neither a use, nor any misrepresentation, in relation to the bottle or to the IBC as a whole. They seek to prove that those of their customers who buy cross-bottled IBCs using Schütz cages are perfectly well aware that what Delta describe as a "remanufactured" IBC may contain a bottle from a manufacturer other than the maker of the cage and that, although end-users of the products sold by their customers in such IBCs may not have the same awareness, they are in any event indifferent to the manufacturing source of the different component parts of the IBC in which the contents are delivered.

THE EVIDENCE

8. The evidence deployed at trial consisted of:

i) Specimen IBCs, made available for inspection in the West Green car park of the Royal Courts of Justice.

ii) Documents, including the relevant registered particulars of the trade marks relied upon.

iii) Witness statements from the parties, from customers and end-users, some but no means all of whom were subjected to cross-examination.

iv) Evidence from two experts.

(1) Sample IBCs

9. Three sample IBCs were provided for inspection, which I conducted on the first day of the trial, accompanied by the parties' counsel, their experts, and certain others. All of them were empty at the time of inspection.
10. The first sample was a new Schütz IBC, of the type depicted in figure 1 above. The following features of it are worthy of mention. First, the side walls of the bottle were smooth and, while empty, there was sufficient space between the bottle and cage to permit it easily to be removed from the cage.
11. Secondly, two horizontal galvanised steel bars were fitted across the top of the bottle, being screwed to the top of the cage on each side. They each passed through small moulded plastic eyes located on the top of the bottle, on opposite sides of the filler cap. The crossbars are designed to be easily removed before extraction of the bottle.
12. Thirdly, both the cage and the pallet were provided with a recess at the bottom so as to accommodate the triangular sump at the foot of the bottle which terminates with the valve. This is designed to permit full draining of the contents of the bottle.
13. Fourthly, the bottle had moulded into it both the Schütz trade marked name and device, but in a manner which is much less conspicuous than Schütz' use of the same trade marks on the cage. This is mainly because they appear at the top of the bottle where it is invisible if the IBC is part of a stack, and because the trade marked moulding on the bottle is in the same uncoloured translucent plastic as the rest of the bottle. The Schütz name also appeared on the handle of the valve. Again, this was not conspicuous until close inspection and, even then, appeared in my view to be as likely to point to the valve itself, as to the bottle as a whole, as an identification of origin.
14. Fifthly, and by contrast, the Schütz name was stamped conspicuously on to the lower part of the nameplate on the front of the cage. The triangular device trade mark appeared on each of the four corners of the pallet.
15. Sixthly, the central part of the nameplate (above the Schütz name) is used for the affixing of adhesive labels descriptive of the type, specification and amount of the contents of the IBC. These labels are, of course, affixed by the filler rather than the manufacturer of the IBC. At the top of the nameplate there appeared a UN certification label which denotes that the IBC is approved for the transport of dangerous goods, regulated by the European Agreement concerning International Carriage of Dangerous Goods by Road 2011 (the "ADR"), as implemented in the UK by the Carriage of Dangerous Goods and Use of Transportable Pressure Equipment Regulations 2009. It certifies to those in the know that the type of IBC in question has passed certain rigorous "design type" tests, and that the particular IBC had been leak-tested before leaving the manufacturer. Finally, the nameplate on the Schütz IBC contained a socket for the insertion of a Schütz collection ticket, the completion of which is designed to enable an end-user to avail itself of the Schütz used bottle return service.
16. The second sample provided for inspection was a cross-bottled IBC supplied by Delta. It was one of ten obtained by the claimants through the use of a trap order. It consisted of a used Schütz cage (and pallet) containing a new bottle made by Werit, another prominent IBC manufacturer. It displayed, on inspection, the following relevant features. First, the Werit bottle had vertical indentations running from top to bottom along each of its sides. These were not aligned with the vertical bars of the Schütz cage. Whether they were designed to align with vertical bars on a Werit cage I do not know. They may have been designed simply to provide additional rigidity to the bottle itself. Apart from that, the Werit bottle, while empty, appeared to have broadly equivalent external dimensions to the Schütz bottle in the first sample.
17. Secondly, in the approximate place where the Schütz bottle had moulded eyes to accommodate the removable crossbars on the top of the Schütz cage, the Werit bottle had no such eyes but, instead, two lugs which the evidence suggested were designed to engage with sockets at the top of the Werit cage. The result was that in the Delta sample, the top bars of the Schütz cage provided no upward support to the Werit bottle.
18. Thirdly, the Werit bottle also contained the Werit name and device moulded into it in much the same way as on the Schütz bottle, and on the valve, but in no more conspicuous a manner than the Schütz name and device on the Schütz bottle and valve.
19. Fourthly, the nameplate on the cage continued to display the Schütz name, just as it had done when originally sold by Schütz. Importantly, it also contained the same adhesive label with a UN ADR certificate as it had when originally sold by Schütz although, as was common ground, it ought not to have done so. The evidence was that the hybrid product constituted by the Delta cross-bottled Schütz/Werit IBC had not been subjected to the design type testing necessary for the issue of a UN ADR certificate, nor had it been leak-tested after assembly by Delta (although the bottle had been leak-tested before delivery by Werit to Delta).
20. Fifthly, more generally, the Delta cross-bottled IBC appeared to my relatively uninitiated eye to present itself to the world as a Schütz IBC, in the sense that the conspicuous Schütz name on the plate on the cage was easily the most prominent display of any mark of origin, the Werit marks on the bottle and valve being visible only on much closer inspection.
21. Finally, the Delta cross-bottled IBC had affixed a Delta adhesive label, the main purpose of which appeared to be to notify an end-user of the availability of the Delta used IBC collection service.
22. The third sample need only be briefly described. It consisted of a Schütz cage (and pallet) containing a bottle manufactured in Argentina by Industrias Temoplasticas Argentinas ("ITA") under licence from Schütz, for use in the Argentinian IBC market. The evidence did not show whether this was an original or rebottled IBC.
23. The main relevant feature of the third sample (which I shall call the "ITA" IBC) was that the bottle had wide vertical indentations on its sides, similar in depth but wider than the vertical indentations on the Werit bottle in the second sample. While empty, these indentations did not appear to marry up with the vertical bars on the Schütz cage in the sense that each bar corresponded with an indentation on the bottle. Nonetheless, the evidence of Mr Fernando Corchon of ITA (which Delta did not seek to subject to cross-examination) was that, once filled, those indentations each accommodated one or more of the vertical bars on the Schütz cage, so that the full bottle rested evenly against both vertical and horizontal bars on all sides of the cage.

(2) Documents

24. It is unnecessary to describe the documentary evidence. I will refer to it when necessary in my findings of fact.

(3) Witnesses of Fact

25. Schütz UK called its managing director Mr Robert Banks. Delta called its founder and former director Mr William White, and his son Adam, who has now largely taken over the running of the company. All those three party witnesses were cross-examined at some length, and I found all of them to be generally reliable, sensible and honest witnesses who, while no doubt concerned to do their best for their respective parties, did not allow that motive to impair the reliability of their evidence to a substantial degree.
26. Delta also relied upon the witness statement evidence of its sales manager Mark Drury. The claimants did not seek to cross-examine him, so his evidence was admitted unchallenged.
27. The claimants relied upon the evidence of directors or employees of some nine different end-users of IBCs, including in particular cross-bottled IBCs in Schütz cages remanufactured by Delta. All except one of them were cross-examined, usually concisely, by Mr Craig for Delta. The exception was a Mr Steven Goodman, a supervisor at Phoenix Vessel Technology Limited, who had left Phoenix before the trial, and could no longer then be located. His evidence was admitted, for what it was worth, under the Civil Evidence Act. I have already mentioned the unchallenged evidence of Mr Corchon from ITA.
28. Again, where tested by cross-examination, I was generally favourably impressed by the good sense and reliability of the evidence given by these witnesses. None of them had any axe to grind in relation to a dispute by which they were largely unaffected. They all appeared to be concerned honestly to assist the court. I shall return to the evidence of Mr Philip Worrall, the quality control manager for Marcegaglia (UK) Limited. His company was both an end-user of IBCs (both from Schütz and Delta) and a supplier of the steel tubes to the claimants from which its cages were made. That relationship of supplier and end-user made it necessary for me to consider carefully whether he might be otherwise than wholly independent. In the event I could not detect any disabling partiality for the claimants.
29. Delta relied on the witness statement evidence of directors or employees of six of its (filler) customers. The claimants did not seek to cross examine any of them, so their evidence was admitted unchallenged.

(4) The Experts

30. The claimants called Mr Philip Pease, the CEO, since May 2004, of the Industrial Packaging Association ("IPA"). His opinions were delivered with the formidable authority conferred from a lifetime's experience in the industrial packaging market, and IBCs in particular, since their emergence in the early 1980s. After leaving university he worked for his family firm, E. Pease & Sons Limited which was in due course taken over by a leading European IBC manufacturer Sotralenz UK Limited, for which he became the managing director of its reconditioning division, responsible in particular for the reconditioning and remanufacture of used IBCs. From 2002 onwards he developed a consultancy business which in due course led him into active involvement in industry associations, three of which merged in 2004 to become the IPA, which is the leading UK trade organisation for industrial packaging, dealing with various UK European and International working groups, including the UN in relation to the design, safety and environmental aspects of industrial packaging, including IBCs. He is also the current chairman of the Department for Transport's Packaging Scheme Review Committee, responsible for overseeing the UK's Dangerous Goods Certifications Scheme, operated by the Vehicle Certification Agency.
31. Mr Pease was, both in writing and under cross-examination, an impressive, genuinely expert witness with an extraordinarily good and precise memory for detail. He displayed no inappropriate partiality for the claimants, but the documents tended to confirm my impression from his report that he had become something of a spokesman for a campaign within the industry to ensure that the inappropriate use of cross-bottled IBCs for the transport of dangerous goods did not risk compromising the high standards which, in his view, needed to be maintained by the IBC industry. His principal concern was the greater risk of failure of cross-bottled IBCs by comparison with original or rebottled IBCs, due to the absence of any coherent and unified approach to their design and, with certain exceptions, the absence of design type testing of particular cross-bottled types.
32. This entirely laudable objective was of limited relevance to IBCs cross-bottled by Delta, since Delta did not direct them at the dangerous goods market. Nonetheless, as Mr Pease perceptively pointed out, the escape of 1,000 litres of (say) cooking oil onto a busy motorway due to a design defect in an IBC (or un-tested incompatibility between the cage and the bottle of different manufacturers) could lead to just as serious a safety hazard as the escape of dangerous goods, such as a corrosive acid.
33. Nonetheless, although Mr Pease therefore had perhaps a built-in tendency to emphasise the downside (in terms of quality and risk of failure) of cross-bottled IBCs, his assistance to the court about the development and structure of the IBC market was of the highest order. Indeed, under cross-examination, Mr Adam White readily acknowledged his respect for Mr Pease's general knowledge about the packaging industry, and his views about the UN ADR.
34. Delta called Mr Warren Lister, a Chartered Engineer and founding member of the Expert Witness Institute with numerous qualifications and experience in providing expert evidence in relation to an extraordinarily wide range of engineering specialities, ranging from automatic gunnery and weapon systems to wave and wind machines. His previous experience of IBCs proved to be much more limited than that of Mr Pease, being confined to experience in handling systems incorporating steel bottled IBCs containing powders rather than liquids. He was therefore, at least at first sight, much less well qualified than Mr Pease as an expert in this narrow technical field, but he largely made up from this initial disadvantage by bringing his broad engineering experience to bear with a refreshing degree of down to earth commonsense and the complete lack of any agenda.
35. Like Mr Pease he demonstrated no partiality towards Delta, being ready to criticise particular examples of incompatibility between cage and bottle among cross-bottled IBCs.
36. The principal difference between the opinions of Mr Lister and Mr Pease lay in their different views as to the risks in practice of combining cages and bottles from different manufacturers, in the absence of design type testing and post-manufacturing leak-testing of the resulting hybrid product. In short, Mr Lister's view was that Mr Pease's concerns, while deserving respect in theory, did not justify a view that the general run of cross-bottled IBCs came anywhere near being unfit for purpose, even if a unitary design by a single manufacturer might properly be described as preferable in engineering terms.
37. In the end, but for reasons which I shall explain later, it was unnecessary for me to resolve differences of that kind as between the two experts. To the limited extent that it matters at all, I consider that Mr Pease's much more focused experience of the articles in issue gave him an advantage in terms of authority which Mr Lister's greater engineering experience and undoubted commonsense narrowed, but did not entirely displace.

THE FACTS

IBCs Generally

38. IBCs fill a gap in the industrial packaging market between barrels, kegs and drums on the one hand and road and rail tankers on the other. IBCs of the type in issue began to come into common use in the early 1980s. The primary market for IBCs consists of industrial concerns purchasing them for use in the delivery of industrial fluids and pourable solids, both of the dangerous and non-dangerous type. I shall refer to those purchasers as "fillers".
39. A filled IBC is typically sold by the filler to its customer together with its contents, the substance of the transaction being a sale of the contents, and the IBC being included as the means of storage while in transit.
40. Customers of the fillers, to which I shall refer as "end-users" would thereby obtain ownership of the IBC. It would be of value to most of them as a convenient means of storage of the contents purchased from the suppliers, pending use, and as a convenient means of dispensing the contents in connection with their industrial processes, by being, in effect, plumbed-in to their manufacturing plant. Because of their standard external dimensions, IBCs are (almost regardless of their particular manufacturer) suitable to be stored up to four high without intermediate support and customers were able to design and build warehousing systems specifically for the bulk storage of numerous IBCs, accessible by forklift truck. Some end-users appear to have provided separate racking for each IBC, but most relied on their inherent rigidity in unsupported stacks.
41. End-users were in practice able to specify to their fillers, and their fillers to IBC manufacturers, particular types of valve suitable for their particular processes. Thus, manufacturers were able to provide IBCs with bottles fitted with a default type of valve, or different specific valve types upon request. Generally, it is unusual for an end-user to specify a particular IBC manufacturer to its filler.
42. The inherent suitability of IBCs for reuse, coupled with the inconvenience and cost to end-users of having otherwise to dispose of IBCs once emptied, led to the early development of a quasi-market for the recovery of used IBCs, with a view either to cleaning or rebottling, depending upon the reusability of the bottle. This in turn led to the development of a secondary market for the sale of used, reconditioned IBCs, at a discount to the price of new IBCs of the same type.
43. The recovery and resale of used IBCs was engaged in both by IBC manufacturers and by other firms seeking to specialise purely in the used IBC market. Mr Pease's family firm was engaged in reconditioning by washing and minor repairs to components, but not rebottling. Delta did much the same, both by buying used (and unwanted) IBCs returned by end-users to manufacturers, by buying or collecting free of charge used IBCs from large scale end-users, and by providing a service to anyone in the IBC market wishing to have used IBCs reconditioned for reuse.
44. Recognising the attraction to end-users of being able to dispose of empty IBCs without cost or inconvenience, the main manufacturers developed return services. Generally, (but with exceptions) each manufacturer developed return services aimed at collecting IBCs originating from it, rather than from other manufacturers.
45. Reconditioning of used IBCs by rebottling was, at least initially, an activity more easily engaged in by manufacturers than by specialist reconditioners since, in relation to their own IBCs, each manufacturer had a ready source of identical bottles. Mainly for regulatory reasons, rebottling with an identical bottle from the manufacturer of the cage is regarded in the industry as reconditioning, a process that does not invalidate any original UN ADR dangerous goods certification, provided that the rebottled IBC is leak-tested before re-sale.
46. Entry into the rebottling market by specialist IBC reconditioners took considerably longer to develop on a wide scale, because of their dependency on obtaining appropriate bottles from the manufacturer of the cage of the used IBC. Viewed objectively, this requirement gave the manufacturers an opportunity to exercise some control over competition from specialist reconditioners in the market for used IBCs of its original manufacture, either by limiting the supply of replacement bottles, or by the prices charged for them to specialist reconditioners. There is an issue which I do not need to decide as to the extent to which Schütz made use (or abuse) of this opportunity in dealings with Delta.
47. Cross-bottling, that is the replacement in a used IBC of its bottle by a bottle from a different manufacturer is, in one sense, a sub-set of rebottling. It is however common ground that, in regulatory terms, cross-bottling amounts to a remanufacture rather than reconditioning of the IBC, which invalidates any previous UN ADR dangerous goods certification. A cross-bottled 'remanufactured' IBC can only be UN certified if the hybrid combination of cage and bottle has been not merely leak-tested in each case, but subjected to design type testing, including the stacking and dropping of filled IBCs and, now, vibration testing.
48. The result is that, although some cross-bottled IBC types have obtained UN ADR certification, the focus of the cross-bottling market is upon the use of IBCs for non-dangerous goods, for which there is no specific regulatory regime, beyond the general requirements of the health and safety legislation.
49. There is an issue which, again, I need not resolve, as to the time at which cross-bottling of IBCs began. It is likely to have started, but only on a small scale, during the 1990s. It only began on a large scale in the UK following the construction by Werit of an IBC manufacturing plant in the UK, and the subsequent wide availability of Werit bottles for purchase by specialist remanufacturers, such as Delta.
50. Subsequently, other manufacturers including, occasionally, the claimants have also made bottles available in the remanufacturing market, and one manufacturer apparently designed, but did not widely sell, a 'uni-bottle' specifically designed for use in any manufacturer's cage of the same standard dimensions.

The Parties' Participation in the IBC Market

51. The first claimant is the wholly-owned UK based subsidiary of the second claimant, and carries on within the UK the business of the manufacture and supply of new and used IBCs. The second claimant is the registered proprietor of the trade marks in issue. The second defendant is the proprietor of certain patents relating to the claimants' IBCs. Those patents have been the subject of separate litigation and the second defendant has therefore played no part in these proceedings.
52. For the most part, it is convenient to treat the claimants as a single entity, which I will call "Schütz". It has been the market leader in the sale of IBCs within the UK throughout the period of the dispute, and currently claims a market share of about 70%. In 2006 it sold a little over £29 million worth of new and reconditioned IBCs within the UK.
53. Schütz sells a range of IBCs of the type in issue, all except one of which are UN ADR certificated for the transport of dangerous goods. It has for some time operated a ticket return service for end-users of its IBCs whereby any end-user can, by using the ticket in the slot on the nameplate of the IBC, or a form available online, achieve the prompt collection by Schütz (or its appointed agent) of used IBCs, at no cost to the end-user.
54. Schütz has for many years been an active participant in the market for reconditioned Schütz IBCs. It neither reconditions by cleaning, nor remanufactures by cross-bottling. Accordingly, all used IBCs sold by Schütz consist of a used Schütz cage and a new Schütz bottle. All Schütz IBCs (new and used) are subjected to a leak-test after the IBC has been fully assembled, and before leaving Schütz' factory.
55. Delta is a family company owned by Mr and Mrs William White, and was set up in late 1983 to take over an earlier family business consisting of trading in recycled industrial containers. Delta became a reconditioner of IBCs during the 1980s, and a seller of new IBCs from 2001 onwards. Initially its reconditioning activities consisted mainly of washing, because of the initial unavailability of a sufficient supply of replacement bottles at a competitive price.
56. Since a sufficient supply at a competitive price of replacement bottles began to become available in and after 2002, Delta has become a significant seller of rebottled (usually cross-bottled) IBCs, marketing its products both by personal contact and through an internet website. Its customers are the suppliers of industrial products in the oil, chemical, food and pharmaceutical industries, and its regular customers range in size from multinational organisations to small independent users of a few IBCs each year. In addition, Delta sells occasional small numbers of IBCs to customers which respond to its website advertising, but which do not become regular customers.
57. Delta operates an essentially ad hoc policy in relation to rebottling, sourcing cages of any suitable manufacturer wherever it can find them, either by offering a free collection service or, depending upon market forces at the time, making a small payment to end-users. It collects used cages manufactured by all the main IBC manufacturers, and rebottles them with such bottles as it considers compatible with the cages, depending upon availability and price at the time. Occasionally, but unusually, Delta will rebottle to a customer's particular specification.
58. Delta's evidence, supported by its expert Mr Lister, was that, with certain exceptions, there was sufficient compatibility between the bottles and cages of the main manufacturers to make cross-bottled IBCs fit for the transport and storage of non-dangerous goods. There is an issue about fitness for purpose to which I shall have to return, but the consequence of Delta's perception as to fitness for purpose (fortified by the absence of any significant market resistance to its cross-bottled IBCs) is that prior to these proceedings Delta had become established in the sale of a substantial quantity of cross-bottled IBCs using Schütz cages, not least because Schütz' dominant position in the UK market meant that its cages were more widely available for reuse than those of other manufacturers.
59. Delta does not therefore seek to sell its cross-bottled IBCs as suitable for, still less UN ADR certificated for, the transport of dangerous goods. It describes them in its advertising material as remanufactured IBCs, and seeks to satisfy customers' orders by the assembly of IBCs from such suitable cages and bottles, regardless of manufacturer, as it has available.
60. Both Delta's witnesses and Mr Lister acknowledged that there are certain incompatibilities between particular types of cage and bottle from different manufacturers which render an IBC assembled from those combinations unfit for purpose. The example referred to at trial was that of a Sotralenz bottle in a Werit cage, where the valve on the bottle fouled the pallet and was prone to cause a leak. There is a hotly contested issue, to which I shall return, as to whether the combination of a Schütz cage with any other manufacturer's bottle has in fact given rise to malfunction.
61. Delta does not subject its rebottled IBCs, after assembly, to any kind of leak-test. It is content to rely on the leak-test conducted by the manufacturer of its bottles, taking the view that, save in a case of obvious abuse of the bottle, such as by dragging it across a yard, the process of its insertion into a cage is wholly unlikely to give rise to any increased risk of leakage.
62. Although Delta did from the outset affix its own label to its cross-bottled IBCs (primarily to advertise its collection service to end-users), it did not prior to March 2008 take any steps to disclaim an association which might arise in the minds of its customers or the end-users of cross-bottled IBCs using Schütz cages, between the name Schütz on the plate welded to the cage, and either the IBC as a whole or the bottle.
63. From March until September 2008 Delta attached a label reading:

"REMANUFACTURED by Delta Containers Ltd; to a non-generic specification. Not endorsed by any manufacturer other than Delta Containers Ltd."

64. From September 2008 (shortly after the commencement of these proceedings) Delta changed its label so as to read:

"REBOTTLED BY DELTA CONTAINERS LTD: BOTTLE AND CAGE MAY BE DIFFERENT TO ORIGINAL DESIGN TYPE AND MAY NOT BE SOURCED FROM SCHÜTZ (UK) LTD."

I shall call those types of label "Disclaimers 1 and 2" respectively. They took the form of an adhesive paper label, capable of being washed off by a reconditioner or remanufacturer at a later stage in the life cycle of the cage.

65. From January 2009, pursuant to an undertaking given to the court, Delta removed all Schütz trade marks from cross-bottled IBCs using Schütz cages sold into the market. Until October 2009 it did not remove those marks where merely providing a cross-bottling service to a customer sending the cage for remanufacturing and return.
66. As a result of the decision of the Court of Appeal in the patent infringement action Schütz (UK) Limited v. Werit (UK) Limited [2011] EWCA Civ 303 handed down on 29^th March 2011, Delta has ceased altogether to use Schütz cages for cross-bottling IBCs, having previously agreed to be bound by the outcome of those proceedings, so as far as concerns patent infringement.
67. Nonetheless, Delta wishes to resume such activities, either upon the expiry of the relevant patent or, (if permission be granted) upon a successful outcome of an appeal by Werit to the Supreme Court. If otherwise at liberty to do so, Delta proposes to replace Disclaimer 2 by a further disclaimer ("Disclaimer 3") in the following terms:

"IBC CROSS-BOTTLED BY DELTA CONTAINERS LIMITED

WARNING — THIS CROSS-BOTTLED IBC IS NOT FOR USE IN THE TRANSPORT OF HAZARDOUS GOODS

Original cage and pallet made by Schütz (UK) Limited or one of its affiliates and fitted by Delta Containers with a new inner bottle manufactured either by Delta or by the manufacturer whose name appears on the bottle. Schütz has not certified or approved this IBC nor is Schütz affiliated in any way with Delta Containers Ltd and/or the manufacturer of the bottle."

The Schütz Trade marks

68. Schütz GmbH has registered six trade marks in relation to IBCs, to none of which there is a challenge as to validity. The first three are all Community trade marks.
69. The first, number 00870188, filed on 7^th July 1998, registered the Schütz name as a trade mark under class 6 for:

"Packages of metal in form of barrels and drums; transport and storage containers of metal; pipes and metal."

and under class 20 for:

"Packages of plastics in the form of barrels and drums; flexible transport and storage containers of plastic fabric."

70. The second, numbered 005815998, filed on 5^th April 2007, registered the triangular device with an "S" in it, under class 6 for:

"Packaging of metal in the form of casks and drums; transport and storage containers of metal; metal tube,"

and under class 20 for:

"Packaging of plastic in the form of casks and drums; transport containers and storage tanks of plastic; flexible transport containers and storage tanks of plastic fabric."

71. The third, numbered 005816401, filed on the same day, registered the combination of the triangular device and the Schütz name for virtually the same description of goods, under both classes, as the second registration.
72. Following the commencement of these proceedings, Schütz GmbH registered three UK trade marks, all of which were filed on 28^th October 2009. The first, numbered 2530075, registered the combined device and name, under class 6, for:

"Containers for transport and/or storage purposes; containers for transport and/or storage purposes made wholly or principally of metallic materials; intermediate bulk containers for transport and/or storage purposes made principally of metallic materials; containers and intermediate bulk containers for transport and/or storage purposes, comprising an outer metallic grid cage and an inner plastic container; containers and intermediate bulk containers for transport and/or storage purposes made principally of metallic materials, comprising an outer metallic grid cage and an inner plastic container; parts and fittings for all the aforesaid goods."

and under class 20 for:

"Containers for transport and/or storage purposes; containers for transport and/or storage purposes made wholly or principally of non-metallic materials; intermediate bulk containers for transport and/or storage purposes made principally of non-metallic materials; containers and intermediate bulk containers for transport and/or storage purposes, comprising an inner plastic container and an outer metallic grid cage; containers and intermediate bulk containers for transport and/or storage purposes made principally of non-metallic materials, comprising an inner plastic container and an outer metallic grid cage; parts and fittings for all the aforesaid goods."

73. The second and third of the UK trade mark registrations registered separately the triangular device and the Schütz name in respect of precisely the same descriptions under classes 6 and 20.
74. It will be apparent that the critical distinction (apart from date of filing) between the Community and UK trade marks is that the former were registered in respect of the cage and the bottle separately, whereas the latter were registered in respect of descriptions apt to describe the IBC as a whole.

TRADE MARK INFRINGEMENT

The Law

75. In relation to Community Trade Marks Article 9 of the CTM Regulation (Number 207/2009) headed "Rights conferred by Community trade mark" provides (so far as is relevant) as follows:

"1. A Community trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:"

(a) any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered;

(b) …

2. The following inter alia, may be prohibited under paragraph 1:

(a) fixing the sign to the goods or to the packaging thereof;

(b) offering the goods, putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder;"

76. Article 13, headed "Exhaustion of the rights conferred by a Community trade mark" provides as follows:

"1. A Community trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by a proprietor or with his consent.

2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market."

77. For UK marks, section 10(1) of the Trademarks Act 1994 makes substantially the same provision, albeit in slightly different language, to that which I have recited from Article 9. It was common ground before me that for present purposes those differences in language were of no consequence.
78. There is of course no issue but that the marks appearing on the Schütz cage of a Delta cross-bottled IBC are identical with the registered Schütz marks. It also became common ground during the trial that each of the cage, the bottle and the IBC as a whole were, in relation to Delta cross-bottled IBCs using a Schütz cage, properly to be regarded as identical goods, for the purposes of Article 9.1(a), with those for which the Schütz marks are registered. The comparison is to be made between the description of goods in the particulars of registration and the goods in relation to which the identical marks are actually used by the alleged infringer.
79. Since the underlying issue between the parties is whether Delta used the Schütz marks in relation to the bottle and the IBC as a whole, it being common ground that Delta used them in relation to the cage, the question of law upon which I invited submissions was the precise meaning of the expression "use … in relation to … goods", and the nature of the forensic test which that formulation required the court to carry out.
80. It is commonplace for a manufactured product consisting of components from different manufacturers to exhibit trade marks in circumstances where a particular mark on one component is plainly not being used "in relation to" either the product as a whole, or to other components within it. For example, no one would suggest that the affixing of tyres bearing the name and mark Pirelli to a car made by Ford gives rise to a use of Pirelli in relation to the Ford car, or even to its wheels. It is simply a use in relation to the tyres. Similarly, no one would suggest that Schütz' use of its trade marks on its own IBCs constitutes a use of them in relation to the contents of the IBC inserted by the filler. There will be equally obvious examples, in both types of case, where the use of the mark, prominently displayed on the composite product, is a use both in relation to the product itself and/or its main components, or where (as expressly contemplated by Article 9.2(b)) a mark appearing on packaging is plainly used in relation to the goods inside the package.
81. In a case where the answer is not immediately obvious, it is necessary to identify the test to be applied. For Delta, Mr Craig submitted that, for both Community and UK marks, the test was a simple objective one, to be conducted by the judge using his own faculties, so that I could determine the question simply by my inspection of the Delta cross-bottled IBC in the West Green car park, to decide whether the Schütz marks were being used by Delta in relation to the cage only, or to the bottle, or to the IBC as a whole.
82. Mr Meade QC for Schütz submitted that the question was how the average consumer would understand the marks to be used, relying for that purpose upon Kerly's Law of Trade Marks and Trade Names (14^th ed.) paragraph 14-022 and, by analogy, upon paragraph 14-019 on the related question whether a mark is being used "in a trade mark sense".
83. The "average consumer" is a well known European law concept, originating in relation to consumer protection, and applicable in a variety of fields. It imports the notion that the consumer will be "reasonably well informed, observant and circumspect" and, (for example as reflected in recital 18 to the Unfair Consumer Practices Directive), requires national courts to "exercise their own faculty of judgment, having regard to the case-law of the Court of Justice, to determine the typical reaction of the average consumer in a given case". Community jurisprudence tends to discourage over-reliance on statistical or expert evidence about typical consumer behaviour, or even the evidence of particular consumers. As Etherton J put it in OFT v. Officers Club [2005] EWHC 1080, at paragraph 146 in a consumer protection context:

"If the evidence is given by too few of them, their views will not be sufficiently representative of the entire range of such consumers; if a large number, intended to cover the full range, gives evidence, the adverse effect on the cost and duration of the trial may be disproportionate to the value of their evidence."

84. Mr Meade further submitted that any attempt by a judge to address the typical reaction of the average consumer needed to be conducted in its context, rather than in isolation. The present context is the effect of marks on cages of cross-bottled IBCs in a developed market, both upon fillers and end-users, rather than consumers in any more general sense.
85. I broadly accept Mr Meade's submissions. I would add that, as recognised in Kerly (op. cit.) at paragraph 14-022, the question is not determined by the intention of the alleged infringer, although proof of an intention to use the marks in relation to the relevant goods may go a long way towards a conclusion that a case of infringement is made out.

Application to the Facts

86. It is, as I have said, common ground that, until March 2011, Delta used the Schütz trade marks in relation to the cages of its cross-bottled IBCs. Schütz makes no complaint of that. If it had done, Mr Craig for Delta would have relied upon Article 13 for the submission that, in relation to the cage, Schütz' rights were exhausted. By the time of his closing, Mr Craig did not seek to rely upon exhaustion under Article 13 in relation either to the bottle or to the IBC as a whole. This is because a Delta cross-bottled IBC using a Schütz cage cannot by definition use a Schütz bottle, and because he accepts that the Delta cross-bottled IBC is not a Schütz IBC. Accordingly, neither the bottle nor the IBC as a whole consists of "goods which have been put on the market in the Community under that trade mark by" … Schütz or with its consent, within the meaning of Article 13.1.
87. The application of the average consumer test to the issue whether Delta has been using the Schütz trade marks "in relation to" either the bottle or the IBC as a whole gives rise to particular difficulty on the evidence deployed at the trial. The broadly concurrent view of the witnesses called by Delta from among its filler customers was that they did not regard the use of the Schütz trade marks on the cage of a Delta cross-bottled IBC as relating to anything other than the cage itself. The statements from all those witnesses, none of which were challenged, contain evidence broadly along the following lines:

"When I see a Schütz nameplate on a rebottled IBC that I have purchased from Delta Containers, it does not convey to me that Schütz has made the bottle or that Schütz is the company who produced the IBC. … If an IBC that we purchased from Delta Containers bears the word "Schütz" I do not believe the IBC is endorsed by Schütz…. I do not understand that the inner plastic bottle provided in a re-bottled IBC is from the same source as the metal cage."

88. In sharp contrast, the clear consensus (even after cross-examination) of the witnesses from end-users of Delta cross-bottled IBCs in Schütz cages was that, until the contrary was pointed out to them by a representative (usually a solicitor) of Schütz, they did assume, to the varying extent that they gave the matter any thought at all, that every IBC with a Schütz name on its cage used by them was an IBC manufactured as a whole, including the bottle, by Schütz. Those witnesses gave explanations such as:

"I have never been aware of using an IBC made of a Schütz metal cage and an inner container made by another company…. The metal frame of the Schütz metal cage has a plate saying "Schütz" and therefore I always assumed that the whole IBC is made by Schütz. All I look at when I receive an IBC is the metal frame, I don't notice any markings on the inner container."

89. Some of the witnesses simply assumed, because of a complete unawareness of cross-bottling, that:

"The manufacturer of the outer cage of an IBC manufactured the whole product, including the inner bottle."

Several witnesses observed, once asked to think about it, that the trade marks on the bottle are generally much less conspicuous than on the cage, something apparent on my inspection of the trial samples.

90. One witness expressed shock at having it explained that cross-bottling occurred at all, but he was not in my view typical of the end-user witnesses. Most of them appeared relatively indifferent to the issue, provided that the IBCs delivered by their fillers proved (as they usually did) to be fit for purpose.
91. One exception to that general sense of indifference emerged from the evidence of Mr Phillip Worrall of Marcegaglia (UK) Limited, which was (as I have described) both a user of Schütz caged bottles and a supplier of metal pipes to Schütz for the use in the manufacture of cages. Mr Worrall noticed that some of what appeared to him to be Schütz IBCs had started bowing out at the sides, to an extent that it became difficult to store them side by side in the storage bunds used in Marcegaglia's warehouse. One of them had begun to bow to such an extent that one of the screws holding the bottom of the cage to the wooden pallet had begun to break away from the pallet. Shortly thereafter Mr Banks from Schütz visited Marcegaglia in connection with arrangements for the supply of piping, and Mr Worrall took the opportunity of showing him the bowing IBCs, including the one which had been damaged. His assumption was that what he perceived to be a poor fit between bottle and cage was Schütz' responsibility, as the manufacturer of both, and of the IBC as a whole. On Mr Banks' examination, the damaged IBC proved to be cross-bottled, as were most (but I infer not all) of the IBCs which had bowed.
92. The point of this evidence, for present purposes, is not that the bowing was in fact the result of an incompatibility between cage and bottle, but that Mr Worrall naturally attributed responsibility for the problem to Schütz, on the assumption that the Schütz name on the cage identified that company as the designer and manufacturer of the IBC, including the bottle. Mr Worrall was one of those witnesses who had been previously unaware of the practice of cross-bottling. The question whether the bowing was the result of an incompatibility between cage and bottle, or rather a consequence of the storage methods used at Marcegaglia, is one which was hotly contested, but which it is both impossible and unnecessary for me to decide.
93. The result of this contrast between the evidence of the fillers and of the end-users is that there emerged, albeit on very small samples, two distinct classes of users (to use a neutral word) of IBCs, with two distinct and opposed perceptions on the question whether Delta's use of Schütz trade marks on the cage of its cross-bottled IBCs was a use in relation to the bottle and to the IBC as a whole. In short, end-users did think so, but fillers did not.
94. In my judgment the disparity between the perceptions of those two classes is by no means merely the result of a clever selection of the representative witnesses by each of the opposing parties. Most fillers dealt directly with Delta in the purchase of Delta's cross-bottled IBCs, and may be supposed to have exercised an informed judgment in choosing between new or used IBCs from the named manufacturer, and used IBCs from a secondary market remanufacturer, where quality needed to be weighed against price. By contrast the commercial judgments of end-users generally played no part in the selection of the IBCs in which the industrial products which they sought were delivered by their (filler) suppliers. As one of the end-user witnesses put it, they went into the market for the product rather than the packaging.
95. Although Mr Meade did not cross-examine any of the filler witnesses relied on by Delta, he did submit that, as regular customers of Delta, they could not be regarded as representative of fillers, or even Delta customers, as a whole. He pointed to the evidence that some of Delta's customers were one-off purchasers of a small number of IBCs, who might well have perceptions about the use of the Schütz marks more like those of the end-users. He also relied on Mr Pease's opinion that at least some fillers, in some circumstances, will be misled by the Schütz marks on the cage into thinking that the IBC is entirely of Schütz manufacture.
96. I do not attribute significant weight to Mr Pease's opinion on this issue, although I accept his description of the features of the market on which it is based. In my judgment there will probably be some fillers which do perceive the use by Delta of the Schütz marks on the cage as a use in relation to the IBC as a whole, and also the bottle. In particular, a Delta cross-bottled IBC may after filling by a Delta customer then be reconditioned after use by a washing process which removes the Delta label, and any disclaimers, before it returns to the secondary market on one or more occasions, appearing even to the relatively well-informed filler like a genuine (albeit used) Schütz IBC. Nonetheless I consider that the typical or 'average' filler will not regard the use of the Schütz marks on the cage as a use in relation to the IBC as a whole, or the bottle.
97. Both in relation to trade mark infringement and passing off, Mr Craig submitted that the relevant class for these purposes was the fillers rather than the end-users. His reasoning necessarily differed slightly as between those causes of action. For the purposes of trade mark infringement he said that the end users' apparent indifference to the identity of the manufacturer of IBCs in which their products were packaged hardly qualified them with the attributes of the average consumer, as I have described them above. Nor in his submission were the end-users 'consumers' of the IBCs in the relevant sense at all. They were consumers of its contents, not of the packaging.
98. In my judgment the application of the average consumer test to the question whether Delta used Schütz' trade marks in relation to the bottles of the IBCs as a whole does not depend upon a vain attempt to find a notional average consumer with perceptions somewhere between those of the fillers on the one hand and the end-users on the other. The search for a statistical average is neither warranted by European jurisprudence, nor sensible in the present context. In my judgment the test requires the court to identify the relevant perception of consumers within any relevant class who are neither deficient in the requisite characteristics of being well informed, observant and circumspect, nor top performers in the demonstration of those characteristics. That is in substance what "average" means.
99. Nor do I accept Mr Craig's submission that end-users are not 'consumers' in the relevant sense. I have described how the IBC performs a useful function to the end-user in facilitating the convenient storage and dispensing of its contents, rather than merely being a means whereby the filler transports the contents to its end-user customer's factory gate. The end-user is therefore a person to whom the trade mark, as a badge of origin or authenticity of the IBC as a product, may well have significance. For as long as an IBC performs its functions effectively, that role of the trade marks may be of little consequence to the end-user. But if the IBC were to fail, then it is to the proprietor of the trade mark displayed on it that the end-user is likely to attribute blame for the failure, even if the end-user has no legal recourse against the manufacturer, and has to pursue a complaint through its (filler) supplier. In my judgment end-users of IBCs are consumers in the relevant sense, for that reason.
100. It follows that, since I have concluded that the average or typical end-user of a Delta rebottled IBC in a Schütz cage is likely to perceive that the Schütz trade marks on the cage are being used in relation to the IBC as a whole, including the bottle, the claimants' case of trade mark infringement by Delta is made out, under Article 9.1(a). It is made out both in relation to the bottles, where the use of Schütz' trade marks is protected by its Community trade mark registrations, and in relation to the IBCs as a whole, where its marks are protected by its UK trade mark registrations, albeit that they were filed after the commencement of these proceedings.
101. I have in reaching that conclusion considered but rejected Delta's case that, from March or alternatively from September 2008, any infringing use was negated by the two forms of disclaimer which I have described above, and labelled as Disclaimers 1 and 2.
102. Mr Meade submitted that, if an infringement under Article 9.1(a) is established, then no disclaimer, however prominent or clear in its language, can be sufficient to negate that infringement. In my judgment that submission puts the cart before the horse. The question is whether the appearance of Schütz marks on the cage, alongside either of Disclaimers 1 or 2, is such as to create in the average consumer the impression that the marks are being used in relation to the IBC and the bottle, rather than merely the cage. I have already concluded in the affirmative in relation to Delta cross-bottled IBCs in Schütz cages which bear no disclaimer. IBCs of that type to which Delta affixed Disclaimers 1 or 2 before sale need to be separately considered.
103. I must first briefly address the limited evidence given about the effect of the disclaimers. Two witnesses (a Mr Evered and a Mr Neville) from end-users gave evidence that Disclaimer 2 on Delta IBCs had not come to their attention before the claimants' solicitors had pointed out that some of their IBCs were cross-bottled. Having then more closely examined those IBCs and noticed the disclaimer labels, their view (in their written statements) was that they had been insufficient to displace their earlier assumption that the IBCs were entirely Schütz products, and that they regarded the disclaimers as lacking in prominence, compared with the clear display of the Schütz name on the cage. In cross-examination Mr Craig extracted from one of them an admission that the language of Disclaimer 2 was, if carefully considered, sufficient for the purpose, but no concession that the positioning and size of the labels was sufficient for the purpose, until the IBCs were subjected to an atypically intensive scrutiny after the event.
104. In my judgment neither Disclaimer 1 nor 2 when used during the limited periods to which I have referred were sufficient for the purpose of negating use of a Schütz mark in relation to the Delta cross-bottled IBCs as a whole, or to the non-Schütz bottles inserted in the Schütz cages. I have three main reasons for that conclusion. The first is that neither of them were by their language sufficient for the purpose, however carefully studied. Disclaimer 1 is merely about specification and endorsement. It is not in terms even directed to the question whether the Schütz name on the cage is used in relation to the bottle or to the IBC as a whole. For all that a reader might know, Delta had been responsible merely for the remanufacturing of the IBC using Schütz components. The technical distinction between manufacturing and reconditioning (relevant only in the UN ADR certification context) would be most unlikely to be apparent to end-users of non-dangerous contents, for which Delta's cross-bottled IBCs were sold. Nor does the expression "a non-generic specification" have any sufficiently clear or relevant meaning.
105. As for Disclaimer 2, it is in my judgment fatally undermined by the use of the expression "may not be sourced from Schütz …". It leaves open to the reader an uncertainty whether any particular IBC bearing that label does or does not contain a Schütz bottle, and the reader might expect, if it does not, that some other manufacturer's name or mark would be conspicuously displayed on the bottle itself, if enclosed within a cage made by Schütz. In fact the manufacturer's marks are by no means conspicuously displayed on the non- Schütz bottles used by Delta, although they are there if searched for diligently.
106. Secondly, I do not consider that the labels upon which Disclaimers 1 and 2 were printed were sufficiently prominent for the purpose of conveying an effective message to a typical consumer. My own review tended to confirm the view of the witnesses to which I have referred, namely that the print of the disclaimer was too small to displace the impression gained, by a reasonable but less than rigorous inspection, that the IBCs were Schütz products through and through.
107. My third reason is that the adhesive paper labels used by Delta gave rise to an inherent risk that upon the reuse of a cross-bottled Delta IBC in any number of further cycles which involved reconditioning by washing (rather than by replacement of the bottle) the label would be removed from the IBC, leaving nothing by the Schütz marks on the cage as badges of origin. I do not accept that the washing-off of the Delta disclaimer label by a subsequent reconditioner would, by some supposed break in the chain of causation, enable Delta to escape from the consequences of having originally put into the market place an IBC capable, once parted with its disclaimer label, of giving rise to an infringement of Schütz trade marks.
108. There remains the final question, whether injunctive relief against further infringement of Schütz trade marks by Delta (after the expiry of Schütz' patent, or a reversal of the Court of Appeal's decision in the patent case by the Supreme Court) should be tempered by a proviso that Delta is at liberty to sell cross-bottled IBCs in Schütz cages if a label containing Disclaimer 3 is affixed to them. In my judgment it should not be so tempered. My reasons follow.
109. First, while the language comes nearer to serving the requisite purpose than the language of Disclaimers 1 and 2, Disclaimer 3 still falls foul of the obstacles of lack of prominence and impermanence. A typical reader of Disclaimer 3 might well stop reading at the end of the large print warning about hazardous goods, without ever troubling himself about the small print which follows. Furthermore, it is not proposed that Disclaimer 3 should appear in any more permanent form than on an adhesive paper label.
110. An additional reason for being disinclined to permit what would otherwise be an infringement of Schütz trade marks to be dealt with by Disclaimer 3 is that Delta has already had two attempts to solve its difficulties in this way and failed both of them. The court is in my judgment entitled to conclude from that unhappy history that disclaimers are, simply, not a satisfactory solution in the relevant circumstances. As Mr Meade submitted, a satisfactory solution would of course lie in removing the Schütz marks from the cage before reselling the Delta cross-bottled IBCs, and this was what Delta was doing pursuant to undertakings prior to the Court of Appeal's decision in the patent proceedings. No doubt the process of removal is likely to be more expensive than the routine affixing of a paper label, hence Delta's preference for a disclaimer. Furthermore I acknowledge that removal of Schütz marks by Delta might become even more difficult if Schütz, as it is entitled to do, increases the number or size of its marks on cages manufactured in the future. Nonetheless the presence or absence of economies in Delta's remanufacturing processes is not to be balanced against the risk of trade mark infringement. If the conduct complained of carries a significant risk of infringement, as the sale of Delta cross-bottled IBCs with Disclaimer 3 affixed by label would in my judgment do, then the court ought not to permit it.

PASSING OFF

111. The essential features of the tort of passing off are, sufficiently for present purposes, summarised in the speech of Lord Oliver in Reckitt & Colman Products Limited v Borden Inc [1990] RPC 341, at 406:

"The law of passing off can be summarised in one short general proposition – no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying "get-up" (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specially of the plaintiff's goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Thirdly, he must demonstrate that he suffers or, in a quia timet action that he is likely to suffer, damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the plaintiff."

112. In his skeleton argument and oral submissions, Mr Craig sensibly did not on behalf of Delta challenge the proposition that Schütz had established a goodwill and reputation in its IBCs, sufficiently identified in the public mind with the name Schütz. Delta's case was that its use of Schütz cages bearing the Schütz name as part of its cross-bottled IBCs conveyed no misrepresentation to anyone properly described as a customer or ultimate consumer of its IBCs, for which purpose Mr Craig derived the "customer or ultimate consumer" requirement from Lord Diplock's speech in Erven Warnink v. Townend [1979] AC 731, at 742D.
113. Mr Craig emphasised in this context the distinction between causing "mere confusion" and the making of a misrepresentation which deceives, or is likely to deceive, in circumstances where damage to the claimant is a likely consequence of the deception. He referred in particular to the following passage from Reckitt & Colman v. Borden (supra) at page 417, per Lord Jauncey:

"It is also a prerequisite that the misrepresentation has deceived or is likely to deceive and that the plaintiff is likely to suffer damage by such deception. Mere confusion which does not lead to a sale is not sufficient. Thus, if a customer asked for a tin of black shoe polish without specifying any brand and is offered the product of A which he mistakenly believes to that of B, he may be confused as to what he has got but he has not been deceived into getting it. Misrepresentation has played no part in his purchase."

114. In their re-amended Particulars of Claim the claimants plead the following misrepresentations, namely that Delta's IBCs are:

i) IBCs of or connected with the First Claimant or checked or approved by it; and/or

ii) IBCs in which the inner plastic bottle and the metal grid cage are both from the same source: and/or

iii) IBCs of the same overall quality as those supplied by the First Claimant; and/or

iv) IBCs in which the inner plastic bottle fits intimately and securely with the metal grid cage as aforesaid so as to resist use and wear satisfactorily.

It is for present purposes sufficient to concentrate on (i) and (ii) above.

115. It will be apparent from my analysis and findings in relation to the claim of trade mark infringement that, in my judgment, Delta's use of Schütz cages (without removal of the name Schütz) for its cross-bottled IBCs was such as to lead typical end-users, but not typical fillers, to think that the Delta cross-bottled IBCs were either manufactured as a whole by Schütz, or consisted entirely of Schütz components. Thus, leaving aside only the assertion in (i) above that they conveyed the impression that the IBCs had been "checked or approved" by Schütz, the balance of the misrepresentations alleged in (i) and (ii) are made out, in relation to end-users. I have also concluded that a small minority of fillers, buying once or sporadically small quantities of IBCs from Delta, might be similarly misled or confused, while accepting the force of the unchallenged evidence of a small sample, to the effect that Delta's more regular and typical filler customers would not.
116. I have also found that most end-users of Delta cross-bottled IBCs did not seek to dictate to their filler suppliers the source or type of IBCs to be used by them in delivering the goods ordered by the end-users, and were for the most part (but with certain exceptions) indifferent to the manufacturing source of the IBCs, at least for as long as they performed their function satisfactorily.
117. I have referred to the extended debate between the parties, their experts and some of the witnesses on the question whether Delta's cross-bottled IBCs were in truth any less fit for the purpose of transporting and storing non-hazardous goods than the Schütz manufactured IBCs (whether new or used). I have referred to the incident of bowing which occurred at the premises of Marcegaglia (UK) Limited. Other examples of an alleged increased likelihood of failure were focused upon the lack of any support given to the bottle by the removable bars across the top of the Delta cage (due to the lack of matching eyes moulded into the top of the non-Schütz bottles). I have also referred to the possibility that certain combinations of cross-bottled IBCs may give rise to leakage due to a mismatch between the valve housing at the foot of the bottle and the bottom of the cage. More generally the case was advanced that the vertical grooves on the Werit bottle used as the example of a cross-bottled Delta IBC at trial meant that the fit between bottle and cage was inherently less satisfactory than between a cage and bottle entirely manufactured by Schütz. In that respect Delta's attempt to demonstrate that the Argentinian version of the Schütz IBC manufactured under licence by ITA exhibited a similar apparent (and therefore irrelevant) mismatch between bottle and cage was resolved against Delta by the unchallenged evidence of Mr Corchon.
118. In my judgment this lengthy evidence was insufficiently conclusive for me to find as a fact that Delta's cross-bottled IBCs using Schütz cages were significantly less fit for purpose than Schütz' own IBCs, at least in relation to non-dangerous goods. Nonetheless the evidence, and in particular that of Mr Worrall of Marcegaglia, demonstrated both a risk that Delta's cross-bottled IBCs might prove more prone to some form of defect or failure and, more importantly, a real risk that in the event of failure (for whatever reason) Schütz would rightly or wrongly get the blame for it in the mind of the relevant end-user at whose premises the failure had occurred.
119. A successful claim in passing off does not in my judgment require any demonstration that the defendant's product is of lower quality, or more prone to failure, than the claimant's product. Likelihood of damage may be sufficiently proved by a demonstration that the mistaken association in the mind of consumers between the claimant and the defendant's product exposes the claimant's goodwill and reputation to damage by being wrongly blamed for a failure, or a defect, should it occur. This is well illustrated by the decision of the Court of Appeal in Associated Newspapers Group plc v. Insert Media & ors [1991] FSR 380. The defendant had established a business of inserting advertising material into national newspapers after delivery by the publishers to newsagents, and the claimant publisher proved that the purchasers of papers in which those inserts had been made were likely wrongly to associate the publisher with the inserts. Giving the leading judgment, Browne-Wilkinson V-C continued, at page 388:

"If the third defendant can procure newsagents to make inserts without the knowledge and approval of the plaintiffs, there must be a real risk that the Daily Mail will be thought by the readers to be responsible for the accuracy and honesty of those advertisements. The publishers will have no control over the nature of the advertisements, or their honesty or their quantity. There is therefore an obvious, appreciable, risk of loss of goodwill and reputation by the publishers."

That conclusion did not depend upon evidence that the defendant's inserts were dishonest or excessive in quantity. It was sufficient that the publisher was exposed to that risk.

120. In my judgment the evidence in the present case was sufficient to demonstrate a real risk that Delta's cross-bottled IBCs might occasionally fail or develop significant defects while located at end-users' industrial premises, and that end-users might wrongly attribute those shortcomings to defects in design or manufacture by Schütz, believing from the Schütz name on the cages that the entire IBC had been manufactured (and therefore designed) by Schütz, or that, at least, all its component parts emanated from Schütz.
121. As in relation to trade mark infringement, Mr Craig advanced a similar submission that end-users were not properly to be regarded as "ultimate consumers" of Delta's cross-bottled IBCs, for passing off purposes. In this context his submission was based upon the general lack of end-user choice as to the IBC in which its product was to be delivered, and the usually substantial level of indifference as to the source of IBCs in the corporate minds of typical end-users.
122. I have no more been persuaded by that submission in relation to passing off, than I was in relation to trade mark infringement. While it is true that the evidence demonstrated that very few end-users dictated to their suppliers as to the IBCs in which goods were to be delivered, and that most were, in the absence of any failures or defects, indifferent as to their manufacturing source, the obvious risk that, in the event of failure or defect, Schütz would get the blame in the mind of an end-user which regarded Schütz as the manufacturer, is a sufficient demonstration of the propensity for the misrepresentation of end-users which I have described to cause Schütz loss. Furthermore, for reasons which I have already given, I consider that end-users of IBCs are, in a real sense, consumers of the IBCs as well as of their contents, because of the valuable functions which IBCs of the type in issue perform for end-users in terms of the storage and dispensing of their contents.
123. Nor do I consider that any of the disclaimers actually used, or proposed to be used, by Delta in connection with its cross-bottled IBCs would be sufficient to remedy either the misrepresentation to which I have referred in the minds of typical end-users, or the risk that, thus misled, they would blame Schütz for any defects or, worse, failures in Delta cross-bottled IBCs which occurred at their premises. My reasons for those conclusions in relation to the disclaimers are sufficiently set out in relation to the similar question whether those disclaimers were effective to negate a case of trade mark infringement.
124. It follows that the claimants' case in passing off is also established by the evidence, and that a final injunction ought to issue so as prevent any such passing off in the future, as and when the expiry or other adverse circumstances affecting the claimants' patent rights might otherwise permit Delta to resume the practice which it has been the objective of this litigation to prevent.
125. I will hear submissions as to the appropriate form of injunction, and as to any necessary case management in relation to the claim for damages.