INTELLECTUAL PROPERTY ENTERPRISE COURT
Fetter Lane, London, EC4A 1NL
B e f o r e :
| MOROCCANOIL ISRAEL LIMITED
|- and -
|ALDI STORES LIMITED
Michael Edenborough QC and Thomas Elias (instructed by Freeth Cartwright LLP) for the Defendant
Hearing dates: 15-16 April 2014
Crown Copyright ©
Judge Hacon :
The classic trinity
(a) goodwill in MIL's business in the sale of Moroccanoil in the UK, which goodwill is associated with the get-up and name of the product such that they are in combination recognised by the public as distinctive of MIL's product;
(b) a misrepresentation on the part of Aldi (whether or not intentional) in relation to the source of Aldi's Miracle Oil product; and
(c) damage to the goodwill by reason of the misrepresentation.
The relevant date
The nature of the misrepresentation
The meaning of 'confusion'
The proportion of the public which constitutes a substantial part
" the crucial question is whether or not the plaintiffs have established a sufficient degree of confusion and deception to take the case above a de minimis level."
In the appeal from Jacob J in that case (same citation) Morritt LJ said at :
" for my part, I think that references, in this context, to "more than de minimis" and "above a trivial level" are best avoided notwithstanding this court's reference to the former in University of London v American University of London (unreported 12 November 1993). It seems to me that such expressions are open to misinterpretation for they do not necessarily connote the opposite of substantial and their use may be thought to reverse the proper emphasis and concentrate on the quantitative to the exclusion of the qualitative aspect of confusion."
Initial interest confusion
"The misrepresentation must be more than transitory: it is not sufficient that a purchaser is misled initially but his misunderstanding is dispelled before any material step is taken (see Cadbury-Schweppes Pty Ltd v Pub Squash  1 WLR 193, PC). In this case, for example, trade purchasers who were confused as to HENLEYS watches checked the position with Mr Wooley so that any misrepresentation to them was not operative."
" What then is the status of initial interest confusion in European trade mark law? For this purpose, I shall define "initial interest confusion" as confusion on the part of the public as to the trade origin of the goods or services in relation to which the impugned sign has been used arising from use of the sign prior to purchase of those goods or services, and in particular confusion arising from use of the sign in advertising or promotional materials."
Arnold J thought that damage to the trade mark proprietor was relevant to whether initial interest confusion should as a matter of principle qualify as confusion within the meaning of art.9(1)(b):
" My conclusion is that the weight of authority supports the conclusion that initial interest confusion is actionable under art.9(1)(b). Furthermore, I find the arguments of principle in favour of this conclusion advanced by counsel for Och-Ziff more compelling than those against it advanced by counsel for the defendants. Counsel for the defendants had no convincing answer to the point that confusion arising from an advertisement is capable of causing damage to the trade mark proprietor even if such confusion would be dispelled prior to any purchase. Although there will be no diversion of sales in such circumstances, there are at least two other ways in which the trade mark proprietor may be damaged. The first is that a confusing advertisement may affect the reputation of the trade marked goods or services. It is irrelevant for this purpose whether the defendant's goods or services are objectively inferior to those of the trade mark proprietor. The second is that such confusion may erode the distinctiveness of the trade mark. Both of these points were explained with characteristic lucidity and verve by Laddie J. in the context of passing off by false endorsement in Irvine v Talksport Ltd  EWHC 367 (Ch);  1 WLR 2355 , in particular in the passages quoted below."
" In my judgment OCH Capital's use of the signs complained of gives rise to a misrepresentation for similar reasons that I have given in relation to the claim for infringement of the OCH-ZIFF trade mark under art.9(1)(b). It is true that in passing off there is no limit on the relevant circumstances, but I do not accept that it follows that initial interest confusion is not actionable.
 This question is considered by Professor Wadlow in The Law of Passing Off: Unfair Competition by Misrepresentation, 3rd edn (London: Sweet & Maxwell, 2003) at §§5-225-24 and 7-377-40. As he says at §7-39 (footnotes omitted):
"In the absence of better express modern authorities switch selling has to be approached from basic principles. First, Spalding v Gamage decided that there can be passing off with liability for substantial damages merely by advertising goods for sale, even if none are in fact sold. Secondly, the basis of passing off is a misrepresentation causing damage to the claimant's goodwill and there are few a priori limits on what the misrepresentation may be or how the damage may arise: the case in which the defendant's goods are sold as and for the goods of the claimant is now recognised as no more than a special instance of a more general rule. In deliberate switch selling there is necessarily a misrepresentation and the question ought therefore to be whether it is material in the sense that damage arises from it.
'[A] representation made by advertisements that the articles sold at a particular shop are articles manufactured by A.B. (if that is the legitimate effect of the advertisements, which is a separate question) must, in my opinion, be as imperious in principle and may possibly be quite as injurious in operation, as the same representation made upon the articles themselves.'
The success of switch selling as a business practice depends on a potential customer for the claimant's goods being sold the defendant's by a process in which the making of the misrepresentation is an essential step, and damage may therefore be said to arise from the misrepresentation even though the customer has ceased to be misled by the time the transaction is concluded. The general principle is that if the defendant successfully induces the public to do business with him by making a misrepresentation then it ought not to matter that the falsity of the representation would become apparent at some stage. "
 I agree with this analysis. Furthermore, in my view the points made by Professor Wadlow in the first and last sentences of this passage hold good even if the misrepresentation is innocent rather than deliberate.
 Counsel for the defendants submitted that, even if there was a misrepresentation, there was no damage to Och-Ziff since OCH Capital was not in direct competition with Och-Ziff; and that, both for that reason and because any confusion would be dispelled by the time of a contract, Och-Ziff would not suffer any diversion of trade. I do not accept this argument for two reasons.
 First, it is well established that, even in the absence of competition and hence diversion of sales, a misrepresentation leading to the belief that the defendant's business is associated with the claimant's is damaging to the claimant's goodwill. Secondly, it is also well established that, if there is a misrepresentation which erodes the distinctiveness of the indication in question, then that is damage for the purposes of a claim in passing off. As noted above, both of these points were well explained by Laddie J. in Irvine  1 WLR 2355,
 In my judgment both of these types of damage are likely in the present case. The first requires no elaboration. As to the second, I consider that Och-Ziff can rely upon erosion of distinctiveness even though I have not accepted their art.9(1)(c) claim, for two reasons. First, because in this context I have found that there is a misrepresentation as to trade origin. Secondly, because in this context I consider that Och-Ziff are in a better position to rely upon goodwill in, and damage to, the OCH element of their various names."
" taken as standing for the proposition that 'initial interest confusion' in the trade mark sense is sufficient for passing off. The relevant criterion is not confusion in some abstract sense, but misrepresentation, and the misrepresentation must be a material one, in the sense of being really likely to cause damage." (at Ά5-186).
Absence of evidence of confusion
Misrepresentation caused by get-up
"The difficulty confronting the claimant in all actions for passing-off based on get-up is that it is unusual for one trader's goods to be distinguished from those of his competitors exclusively, or even primarily, by their get-up. Normally a brand name or other mark is chosen and given prominence and it is this on which consumers are expected and encouraged to rely. To make out a case based solely on similarities of get-up the claimant must show that deception is likely to notwithstanding the absence of his own brand name on the defendant's goods and the likely presence there of the defendant's brand name and perhaps other distinguishing matter. Not surprisingly, the cases in which passing-off has been found have predominantly been ones of deliberate deception."
Bringing to mind
" In my judgment it is important to distinguish between a defendant who takes a conscious decision to live dangerously and one who intends to cause deception and deliberately seeks to take the benefit of another trader's goodwill. It has long been established that if it is shown that a defendant has deliberately sought to take the benefit of a claimant's goodwill for himself the court will not "be astute to say that he cannot succeed in doing that which he is straining every nerve to do": see Slazenger & Sons v Feltham & Co (1889) 6 R.P.C. 130 at p.538 per Lindley L.J. A trader who has taken the decision to live dangerously is in a different position, however. He has appreciated the risk of confusion and has endeavoured to adopt a sign which is a safe distance away. All must depend upon the facts of the particular case. Further, it must be kept firmly in mind that the ultimate question whether or not the similarity between the trade mark and the sign is such that there exists a likelihood of confusion is one for the court to determine in the light of its global assessment of all material factors, of which the intention of the defendant, as a person who knows the market in which he is offering his goods or services, is only one."
Evidence in relation to goodwill
The name 'Moroccanoil'
The combination of name and get-up
(i) the turquoise blue colour
(ii) the orange graphics; and
(iii) the vertical writing.
In relation to the bottle MIL relied on the same features and in addition:
(i) the shape of the bottle; and
(ii) the colour of the bottle and cap.
Ownership of goodwill
"Double-Take: Aldi's Miracle Oil is the Living Spit of Moroccanoil at a 10th of the Price
I did a bit of a blink blink eye rub when I saw this in my email. 'Aldi selling Moroccanoil? Surely not!'
Nope. Definitely not. In a triumphal move akin to Lidl's Suddenly Madame Glamour/Chanel Mademoiselle coup, the budget retailer is sneaking out a remarkably Moroccanoil-alike blue and brown bottle onto shelves from Thursday 29th March. Miracle Oil (where did they get the inspiration for the name, I wonder ) will be a 50ml bottle for a mere 3.99"
This was posted on 23 March 2012, probably in the Republic of Ireland, but relied on by MIL and it may well be indicative of the reception given to Miracle Oil in the UK. It engendered 31 responses, including this:
"This Miracle Oil doesn't claim to be Moroccanoil but is a bit cheeky with their choice of packaging. I've no doubt there'd be a case to be answered if they've flouted any copyrights on design etc."
The following appeared on another blog, posted on the date of launch, 29 March 2012:
"Aldi's Version Of Moroccan Argan Oil Miracle Oil
On twitter, I heard that Aldi had brought out their version of the Moroccan Argan Oil. They called their version the Miracle Oil. Priced at £3.99 for 50ml.
I wonder if this is just as loaded with cones as the bestselling overpriced somewhat original version. How cheeky is the packaging. I say good on Aldi for undercutting the over-priced version. Did you get yours?"
On 7 April 2012 there was this:
"Aldi Miracle Oil
Another Aldi discovery I have found through reading Milk Bubble Tea's blog Miracle Oil. If you think the bottle looks familiar then it's because it's a blatant dupe of the increasingly popular Moroccan Oil that every girl and her dog has been harping on about for a few months now. The main difference between the two products is the price. The cost of this was a mere £3.99 whereas Moroccanoil costs as much as £30."
Initial interest confusion
(1) MIL's products were supplied almost exclusively through salons, either as applied by the staff or as sold to clients. This is a high-end salon product that the public would not expect to find in Aldi. It appears that MIL's product can also be found on eBay and Amazon, albeit not through any act by MIL, but there was no evidence about the extent to which this happens. I was also shown MIL's submissions to OHIM in the proceedings referred to above in which MIL emphasises that its products are sold by salons to discerning customers who are educated in their use by the hairdresser.
(2) Aldi is a store in which the public expect to find only goods sold under Aldi's own brands. In the case of cosmetics, Aldi uses the in-house brand CARINO. This was undermined, however, by Mr Eivers' admission that Aldi also stock some well known branded goods such as Colgate toothpaste. I think Aldi's customers have come to expect the possibility that cosmetic brands other than those of Aldi will be available in the stores.
(3) The price of Miracle Oil, about £4, is so different from the price of Moroccanoil, about £30, that the two products would not be viewed by consumers as being the same thing. That may indeed be unlikely, but it would not exclude the possibility that they came from the same manufacturer.
(4) MIL's case rested on the similarities between the get-ups of the Moroccanoil and Miracle Oil boxes, while ignoring the differences. The differences were in particular the striking 'M' logo on the Moroccanoil box and the presence of the CARINO brand and a leaf motif on the Miracle Oil box. The same applied to the labels on the bottles.
(5) Mr Edenborough submitted that the shape of the bottles and the colour of the bottles and caps were commonplace. I am prepared to accept that in relation to colour, but am not convinced about the shape of the bottles.
Conclusion on misrepresentation