Scottish Court of Session Decisions

The pursuers are a company registered in the United States of America who produce, sell and supply inter alia confectionery for children. Among their products are lollipops sold under the names PUSH POP and MEGA PUSH POP. As described in the pursuers' pleadings, each of these consists of a translucent stick of coloured confectionery contained within a small plastic container. The plastic container has a clip allowing it to be clipped to a pocket. The plastic container is cylinder shaped. It has a lid which is removable to expose the confectionery. The lid can thereafter be replaced to allow the remaining contents to be consumed on a future occasion. The pursuers go on to aver that PUSH POP lollipops have been on sale in the USA since 1985. They have since been introduced in sixty countries throughout the world. They were first sold in Scotland in 1990. The MEGA PUSH POP (which, as its name would suggest, is a larger version of the PUSH POP) was introduced in 1992. The retail value of sales of PUSH POP and MEGA PUSH POP in the UK since 1991 is £15.415 million. The wholesale value of PUSH POP and MEGA PUSH POP in the financial year to February 1999 is £1.152 million. Wholesale prices are 53% of the recommended retail price, typically 50p for the MEGA PUSH POP and 32p for the PUSH POP. The pursuers have advertised extensively on television throughout the UK. A television advertising campaign was shown throughout the UK from September to November 1998. They aver that recent marketing information from a leading retailer indicated that the MEGA PUSH POP was the third fastest selling children's confectionery product in Scotland, and the PUSH POP was the tenth fastest. In the UK they are respectfully the second and the eleventh fastest. The pursuers claim that the PUSH POP and the MEGA PUSH POP product has accordingly a substantial presence and enjoys substantial goodwill in the confectionery market in the UK and in Scotland.

The first defenders are distributors of confectionery products. In January 1999 they commenced distribution of a product manufactured by the second defenders and called TWO TO ONE POP & TOY. (In their pleadings the pursuers omit "POP & TOY" from this name, no doubt because these words are in smaller writing than "TWO TO ONE", but I shall use the longer name as that is how it is given in the defenders' pleadings.) As described by the pursuers, this product consists of a translucent stick of coloured confectionery contained within a small plastic container. The plastic container has a clip allowing it to be clipped to a pocket. The plastic container is cylinder shaped. It has a lid which is removable to expose the confectionery. The lid can thereafter be replaced to allow the remaining contents to be consumed on a future occasion. The container is almost identical in size to the container for the MEGA PUSH POP. The TWO TO ONE POP & TOY typically retails at 50p, which is the same price as that of the MEGA PUSH POP. The pursuers aver inter alia that the defenders have passed off or attempted to pass off the TWO TO ONE POP & TOY as being a product of or connected with the pursuers. They aver that the confectionery and its packaging are highly similar to those of the pursuers. In addition they refer to display boxes which are claimed to be very similar in visual appearance to those of the pursuers, and the use of the letters "TV" on the display boxes. The pursuers claim that their business and goodwill are likely to be damaged as a result of this alleged passing off.

On 2 February 1999, on the ex parte motion of the pursuers, I pronounced an interlocutor in the following terms:

In the course of subsequent procedure the second defenders were sisted as defenders on 22 June 1999. After various periods of adjustment, the Record closed on 15 September 1999. One of the main issues on Record relates to trade marks owned by the pursuers. Both of the trade marks are registered in respect of Class 30 (sweets and candy). One relates to the presentation of the confectionery and the other to the shape of the container, the pursuers' description of which I have already mentioned. The pursuers allege that the defenders have infringed these trade marks, while the defenders in a counterclaim seek declarator that the registration of the trade marks is invalid or, alternatively, invalid quoad Class 30 (sweets and candies). A pre-proof hearing is due to take place on 19 January 2000. The first defenders have enrolled for recall of the interim interdict pronounced by me on 2 February 1999. At the hearing of the motion counsel did not seek to address me on the trade mark issue, and confined their submissions to the passing off issue.

It is apparent from the pleadings that there is strong competition between the pursuers and the second defenders throughout the world, with varying outcomes. The pursuers are strongly protective of their PUSH POP and MEGA PUSH POP product. In some markets the pursuers have been successful in preventing the introduction of the second defenders' TWO TO ONE POP & TOY. In other markets the second defenders have succeeded in introducing this product, which they admit has been marketed aggressively. The pursuers allege that they have lost sales as a result, and that there has been confusion between the two products. The present litigation may therefore require in due course to be viewed in a wider context.

The same counsel is instructed for both defenders. In moving me on behalf of the first defenders for recall of the interim interdict he explained that at the time when the interim interdict was pronounced a television advertising campaign for TWO TO ONE POP & TOY was about to be launched and was cancelled as a result. Television advertising campaigns came in annual cycles, so the next campaign would be in early 2000. The steps which required to be undertaken before advertisements were broadcast took a period of several months. It was thus necessary to seek recall of the interim interdict now in order to enable the television advertising campaign for 2000 to proceed. The passage of time since the interim interdict was pronounced could be explained by the fact that the second defenders were Spanish, there was a need for the defenders to communicate with each other and with their solicitors, the second defenders came from a different culture with a different language and there was a need for all documents to be translated into Spanish, and also it had been thought best to have the benefit of a full set of pleadings before the motion for recall was enrolled. The principal issue between the parties related to the trade marks, and the passing off issue was peripheral to it. While not seeking to dispute the points of similarity between the two products, as brought out in the pursuers' descriptions which I have referred to, counsel for the defenders was at pains to emphasise points of distinction between them. As he indicated, the PUSH POP and MEGA PUSH POP each have an opaque coloured top and an opening in the bottom through which the lollipop can be pushed up manually. The TWO TO ONE POP & TOY, however, has a transparent top, through which the lollipop can be seen, and the bottom is enclosed with a cap which, when removed, discloses a small toy. There is a wide range of such toys. A child who purchased the product would not know what toy came with it until after the purchase, so there was an element of surprise which acted as a attraction. Counsel described this as a critical distinction between the products. Counsel also referred to the lettering and other aspects of the printed labels on each of the products and to the display boxes in which they are sold. He explained that the letters "TV" appeared on the TWO TO ONE POP & TOY display box because of the then imminent television advertising campaign. This was not therefore an attempt to exploit the pursuers' advertising. Counsel accepted that there was no other product on the market in the United Kingdom, apart from PUSH POP and MEGA PUSH POP and (until the interim interdict) TWO TO ONE POP & TOY, which had the features relied on by the pursuers in support of their passing off case.

During the course of their submissions counsel referred to the leading modern authorities on passing off. In Erven Warnink BV v J Townend & Sons (Hull) Limited [1979] A.C. 731 at p.742 Lord Diplock identified five characteristics which must be present in order to create a valid cause of action for passing off:

In Reckitt & Colman Products Ltd v Borden Inc and Others [1990] 1 WLR 491 at p.499 Lord Oliver said:

In addition to these statements of principle, I would add, because it appears to me to be relevant for present purposes, that in the latter case Lord Oliver said at pp.507-8 that the question in that case came down to

I shall bear these passages in mind when I come to consider the question whether the pursuers have established a prima facie case.

It was accepted on behalf of the pursuers that for the interim interdict to stand they required to satisfy me that they had a prima facie case and that the balance of convenience favoured the pursuers. In the course of the submissions of counsel about the test to be applied I was referred to Reed Stenhouse (UK) Limited v Brodie 1986 S.L.T. 354, Toynar Limited v Whitbread & Co plc 1988 S.L.T. 433 and the passage from the speech of Lord Fraser in NWL Ltd v Woods [1979] 1 W.L.R. 1294 at p.1310 which was followed in the latter case. In Reed Stenhouse (UK) Limited v Brodie the court, at pp.357-8, quoted with approval from Burn-Murdoch on Interdict at p.128 a statement that at the stage of a motion for interim interdict the issue has to be determined on a broad prima facie view, which places the question on an entirely different footing from the ultimate claim of a successful litigant to a decree of perpetual interdict, which is a question of almost absolute right, and that the question at that stage is not so much the absolute relevancy of the case as the seeming cogency of the need for interim interdict. The court went on to say that they were not prepared to say things about the legal arguments which might foreclose the issues which the Lord Ordinary would have to determine at the end of the day, but "manifestly there is a case to argue and a case to answer." In Toynar Ltd v Whitbread & Co plc it was accepted that the relative strengths of the parties' cases could be one of the many factors that might go to make up the balance of convenience. It was also held that, in that case, the Lord Ordinary had been entitled to hold that the petitioners had reasonable prospects of establishing what they set out to prove, but that where matters of law were raised, it was neither necessary nor desirable for any concluded decision to be made upon them at the stage of considering the making of an interim order.

Bearing in mind the approach which I thus require to follow in considering the present motion, I turn in the first place to the question whether the pursuers have established a prima facie case of passing off. Both counsel were agreed that in considering this question I should look at the samples of the products which have been lodged in process. While I am prepared to do this, I do so with caution. A similar caution was expressed by their Lordships in Reckitt & Colman Products Ltd v Borden Inc and Others, where samples of the products were available for inspection. This is because in the artificial setting of the court room the products can be inspected side by side, in detail, with the aid of counsel's exposition of their finer points, over a period of several hours and without the distraction of other products. The products are, however, sold as confectionery for children and I have to consider what impression might be made on a child who goes into a typical corner shop clutching a 50p coin and gazes up at the whole range of confectionery on display, all competing by various forms of get-up and other attraction for the child's attention and purchasing power. Viewing the matter in this way, as best I can, I have decided that there is a prima facie case of passing off. Both products have the features of being contained within a small cylindrical plastic container with a removable and replaceable lid and a clip, enabling the child to keep the product in a pocket and consume it a little at a time. No other product on sale in the United Kingdom, and in particular in Scotland, has these features. I accept that there are points of distinction, but it appears to me to be arguable that these are not such as to lead children to recognise that the products come from different manufacturers. The toy feature of the TWO TO ONE POP & TOY is of course a point of distinction, but I am not convinced that it is sufficient, as counsel for the defenders argued, to deprive the pursuers of a prima facie case or at least to make their prima facie case very weak. This is because the pursuers do not have to establish (though they may be able to do so) the risk of direct confusion between the two products, but it is enough for them if they can establish the risk of an "erroneous belief engendered by the [defenders'] misrepresentation that the source of the [defenders'] goods... is the same as the source of those offered by the [pursuers]": see Reckitt & Colman Products Ltd v Borden Inc and Others per Lord Oliver at p.499H. This is the kind of confusion which the pursuers aver has occurred in other countries, where TWO TO ONE POP & TOY has been called "PUSH POP with the surprise". I am satisfied that the pursuers have established that there is a case to argue and a case to answer, and accordingly that they have a prima facie case. As is apparent from the pleadings and from the submissions of counsel, there are numerous points which can be made on either side about the passing off issue in this case, and I think it would be inappropriate for me to say anything more about the merits of a dispute which is clearly going to be the subject of an extensive litigation. Like the Lord Ordinary in Toynar Ltd v Whitbread & Co plc, however, I feel able to express the view that the pursuers have reasonable prospects of establishing what they set out to prove, by which I mean no more than that the strength of their case appears to me to be neither very weak nor very strong. In saying this I do not purport to predict the eventual outcome, nor is it open to me to do so.

I turn finally to the balance of convenience. The pursuers claim that they have an established goodwill, and refer to the market information which I have previously quoted. The defenders dispute this. Their position is that the pursuers' sales have been falling off, by contrast with what would happen if TWO TO ONE POP & TOY went on the market in Scotland, because the surprise toy feature helps to keep sales up. I think that at this stage I should proceed on the pursuers' averments about their sales, which appeared to be supported by market research. If TWO TO ONE POP & TOY is sold in Scotland it is arguable that the pursuers are likely to suffer loss, though the amount of their loss is bound to be a matter of speculation at this stage. It is also arguable that if TWO TO ONE POP & TOY is not sold in Scotland, then the first defenders (and no doubt also the second defenders) are likely to suffer loss, again of an unquantifiable amount. All the parties are substantial companies who can no doubt afford to pay any award of damages: the pursuers if, having obtained an interim interdict periculo petentis, they are unsuccessful when the action reaches a conclusion, and the defenders if, having been permitted now to sell TWO TO ONE POP & TOY in Scotland they eventually lose the action and an award of damages is made against them. What appears to me to be the most significant factor is the status quo, the preservation of which favours the pursuers. The pursuers have the benefit of an existing market for a product which, in the respects I have discussed, is not only distinctive but is unique in Scotland. Preservation of the status quo would protect them against competition from a product, the sale of which would arguably constitute passing off. Apart from the general presumption in favour of free competition there is no very compelling reason why the first defenders should be allowed to sell TWO TO ONE POP & TOY in Scotland meantime. This appears to me to be borne out by the way they have allowed time to pass. I accept that this can be explained to some extent by the considerations put forward by counsel for the defenders, but I have no doubt that if there were any great commercial urgency this motion would have come before me long ago. The proposed television advertising campaign in 2000 does not particularly impress me. I was not told that the market for TWO TO ONE POP & TOY is seasonal, or that television advertising cannot be arranged for any particular period of time. All it means is that there would be an interval between the recall of the interim interdict, if I granted it, and the broadcasting of advertisements; meanwhile, no doubt, the product would appear in the shops. Reference to the proposed television advertising campaign therefore appears to me to be a somewhat factitious attempt to add urgency to a situation where none truly exists.

On the whole matter, therefore, I have decided that the interim interdict ought to stand and I shall therefore refuse the motion for its recall. I would add that it was not suggested that, if I refused the motion, the terms of the interim interdict should be modified in any way. I shall accordingly leave it standing in the terms in which I originally pronounced it.