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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> William Grant & Sons Ltd & Ors v Glen Catrine Bonded Warehouse Ltd & Ors [2001] ScotCS 116 (16 May 2001)
URL: http://www.bailii.org/scot/cases/ScotCS/2001/116.html
Cite as: [2001] ScotCS 116, 2001 SLT 1419, 2001 SC 72, 2001 SC 901
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FIRST DIVISION, INNER HOUSE, COURT OF SESSION
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Lord President Lord Nimmo Smith Lord Clarke
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088/16/92 OPINION OF THE LORD PRESIDENT in RECLAIMING MOTION in the cause WILLIAM GRANT & SONS LIMITED and OTHERS Pursuers and Respondents; against GLEN CATRINE BONDED WAREHOUSE LIMITED and OTHERS Defenders and Reclaimers: _______ |
Act: Hodge, Q.C., Dunlop and Cormack; McGrigor Donald
Alt: Jones, Q.C., Robertson; McClure Naismith
16 May 2001
[1] In this case there are three pursuers and respondents. The first pursuers are William Grant & Sons Limited, a company incorporated in 1991. They are the parent company of the second and third pursuers, William Grant & Sons Distillers Limited and William Grant & Sons International Limited. At a procedure roll hearing at a relatively early stage in the proceedings, the Lord Ordinary (Lord Abernethy) repelled the defenders' second plea-in-law relating to the second and third pursuers' title and interest to pursue the action. See William Grant & Sons v. Glen Catrine Bonded Warehouse Ltd. 1995 S.L.T. 936 at pp. 945 E - 946 C. No point is now taken about the title and interest of these pursuers. Before 1991 the business was carried on by a company, William Grant & Sons Limited, which had been incorporated in 1903. In 1991 the first pursuers acquired inter alia the whole industrial property, goodwill and claims to which the original company then had right. At the proof held before Lord Cameron of Lochbroom, the defenders advanced an argument about the supposed extinction of the goodwill of the original company in the course of the reorganisation of the group of companies after the incorporation of the first pursuers. The Lord Ordinary rejected that argument and counsel for the defenders did not reopen it before this court. It follows that nothing now hinges on the exact twists and turns in the saga of the development of the pursuers' business structure. For the sake of simplicity, I shall therefore generally refer to "the pursuers", irrespective of the exact entity which may have been involved at any particular time.
[2] The defenders and reclaimers are three companies: first, Glen Catrine Bonded Warehouse Limited, secondly, William Morton Limited and, thirdly, A. Bulloch & Company (International) Limited. Again, for most purposes it will not be necessary to differentiate among them and I shall simply refer to "the defenders", except where one particular company was involved in an aspect of the business.
[3] As the Lord Ordinary's long and detailed opinion reveals, in the Outer House a very large number of matters, both of fact and law, were in dispute between the parties. Before this court, by contrast, the issues had narrowed. In particular, the defenders did not challenge the Lord Ordinary's finding that they had passed off their gin and vodka as the pursuers'. By far the most important question in the reclaiming motion, which was debated at length in the hearing, was whether the pursuers' right to interdict had been barred by their delay in raising proceedings, resulting in their being held to have acquiesced in the passing off. Secondly, even if the pursuers' claim was not barred by reason of acquiescence, the defenders contended that, again by reason of their delay, the pursuers were not entitled to the remedy of interdict. Since the pursuers have no conclusion for damages, the question of their entitlement, if any, to that remedy was not explored. Next, the defenders argued that the interdict granted by the Lord Ordinary was too wide since it would prevent them from exporting to countries where, it might be, the applicable law did not prevent the defenders from passing off their spirits as the pursuers'. Finally, the defenders argued that, even if the pursuers were entitled to interdict against the defenders from passing off their spirits as the pursuers' in the United Kingdom and elsewhere, an interdict which had the effect of preventing the defenders from exporting their products to the other Member States of the European Community contravened Article 29 (ex Article 34) EC. For their part, the pursuers cross-appealed against the Lord Ordinary's decision not to grant interdict against the defenders from passing off their business as the pursuers' in terms of the first conclusion.
[4] I propose to deal with each of these issues in turn and to start with the defenders' contention, in their first ground of appeal, that the Lord Ordinary erred in failing to hold that the pursuers had acquiesced in the defenders' passing off of their own gin and vodka as the pursuers'. That argument cannot be dealt with, however, without first setting out the facts upon which it was based. Although a considerable number of pages of the notes of evidence were extended and reproduced for the court, in the event counsel referred to relatively few of them and, indeed, the relevant factual material was not really in dispute. For the most part, therefore, I have been able to rely on drawing together the findings in fact made by the Lord Ordinary at various points in his opinion. The real dispute in the reclaiming motion was as to whether those facts disclosed a basis for holding that the pursuers had acquiesced in the defenders' passing off so as to disable them from obtaining the remedy of interdict which the Lord Ordinary had granted.
[5] The Facts
The pursuers have been distilling whisky since 1887 and, by 1920, they were selling a variety of blended products using labels which included the name Grant's. Although by 1939 the pursuers had built up a substantial overseas business, the greater share of their business remained in the United Kingdom market (23). In the course of the 1970s the pursuers "firmed up somewhat" the use of the name Grant's in order to reinforce the identity of the name (24). In other words, they were building the brand. In about 1985 they began using the name William in conjunction with the word Grant's (2) in order to imply that the pursuers were a real family company. For present purposes, however, what is significant is that, as the chairman of the first defenders, Mr. Bulloch, himself recognised (153), the name Grant's has for long been associated with the pursuers, at least in relation to whisky. Indeed, as the pursuers' brand name, it had been well known to the public since at least the 1940s.
[6] For many years the pursuers concentrated on producing and marketing whisky. From about 1960 onwards, however, this changed. They began to produce and market gin and vodka, especially after the construction of the distillery at Girvan in 1963. To begin with, the design of the label for the gin, which included the name Grant's, was calculated to resemble the labels for the pursuers' blended whisky and Glenfiddich. In about 1970 the design was changed, but the label had the name William Grant's printed in blue and in large letters. When the pursuers began selling vodka on the domestic market, they used the name Light Brigade, which had previously been used for a whisky. The label was similar to the whisky label. In the late 1970s the label was altered to make it resemble the gin label. In the export and duty-free markets the pursuers sold their vodka under the name Grant's Imperial Vodka. Even though the pursuers were producing and marketing gin and vodka in this way, sales of these spirits were always very small by comparison with the sales of their whiskies (25 - 26).
[7] In these circumstances the Lord Ordinary held that, before the 1970s, the pursuers had acquired for the name Grant's, associated both with their business and with their products, including blended whisky, such a degree of distinctiveness as to entitle them to pursue a passing off action for its protection (223 - 224). Although the pursuers have registered trade marks covering the name Grant's in respect of whisky, they have not been able, so far at least, to register the mark in respect of all alcoholic beverages in the United Kingdom. Overseas, the position varies, of course, from country to country but the pursuers do have trade marks which they have been able to use in some countries to combat the defenders' use of the name Grant's in relation to their gin and vodka. The lack of the necessary trade mark in this country explains why the present action is based on passing off.
[8] At the time of the proof Mr. Bulloch was the chairman of both the first and second defenders. He had joined his family wine and spirits business in 1951 when it had a small wholesale operation bottling wine, gin, rum and whisky under the name Bulloch. It also bottled whisky with the name High Commissioner. In 1959 Mr. Bulloch bought William Morton Wine and Spirits Limited and this led to an expansion of the business, which entered the wholesale sector of the market, with sales to public houses, clubs and hotels. Over the 1960s Mr. Bulloch bought more retail shops and wholesale businesses in and around Glasgow. At this time the defenders sold gin and rum under the name William Morton (27 - 28).
[9] In 1972 one of Mr. Bulloch's companies acquired the whole shareholding and assets of John Grant (Wine and Food) Limited, a company which had been incorporated in 1943 in order to supply hotels, restaurants and public houses run by a pre-existing family company, Rogano Limited. Most of the outlets were in the West of Scotland. In about 1955 the family businesses were reorganised and, from then on, John Grant (Wine and Food) Limited took over the ownership and management of a number of the outlets. The company's business was the bulk buying of wines and spirits which were then bottled and labelled before being supplied either to the company's own outlets or, on a wholesale basis, to off-sales premises, licensed restaurants and public houses in and around Glasgow. When Mr. Bulloch's company acquired the business in 1972, the name Grant's and a reference to John Grant (Wine and Food) Limited appeared on the labels placed on the bottles of gin and white and black rum produced by the company. Indeed the word Grant's and the logo JG were both prominent features of the labels and the same style of label continued to be used after Mr. Bulloch acquired the business. By 1974 John Grant (Wine and Food) Limited were bottling and marketing not only gin but also vodka. In that year the company name was changed to John Grant (Blenders) Limited (30 - 31), apparently to show that the business was now a wholesale blending and bottling business rather than a business which mainly bought wines and food for bars and restaurants (35). It is of some importance to notice that the Lord Ordinary rejected the suggestion of pursuers' counsel that the change had been made for some unworthy motive. In any event, after a series of vicissitudes which it is, fortunately, unnecessary to catalogue, that particular company became the repository for various liabilities and debts before ceasing to trade and being eventually struck off the register in 1986.
[10] The result was that Mr. Bulloch then had no business bearing the name John Grant. He regarded this as potentially awkward since the name John Grant (Blenders) Limited was printed on the labels used by the defenders. So in 1989 Mr. Bulloch acquired the newly-incorporated Ostel Bay Company Limited whose name was changed to John Grant Blenders Limited - without any brackets - and thereafter remained a non-trading company. It appears that this change was made with an eye to court proceedings which had been begun by the pursuers in Greece. The name John Grant Blenders now appears on the defenders' labels (33).
[11] At about the same time as Mr. Bulloch changed the name of John Grant (Wine and Food) Limited to John Grant (Blenders) Limited in 1974, he also decided to adopt a particular form of crest (130) which appeared on the labels of the defenders' gin and vodka bottles in both the home and overseas markets. The Lord Ordinary held that the crest was deliberately adopted with the intention of connecting the products with the name Grant because of the association of a crest and the name Grant on the labels of the pursuers' products at that time. This was in line with Mr. Bulloch's general policy of making use of the name Grant in relation to his company's products. The Lord Ordinary concluded (132 - 133):
"However, I consider that there is warrant for the criticism that the adoption of the crest, the signature together with the continuance of the use of the letters JG on labels was motivated at least indirectly by a recognition that a reference to the Grant's name might provide some cachet for the products in a market place where that name was already well-known in its connection to the products of [the pursuers] and in particular its blended whisky. Otherwise it is difficult to understand why Mr. Bulloch was so anxious to perpetuate that name as compared with others, such as Morton or Bulloch, under which products of companies owned by him were being marketed prior to the acquisition by him of John Grant (Wine and Food) Limited or his concern to maintain the name Grant's even after the establishment of Glen Catrine Warehouse Limited, even to the extent of resuscitating the name Grant for one of his companies in 1988, while John Grant Blenders Limited was incorporated."
[12] In another development in 1974 Mr. Bulloch acquired disused premises at Catrine and converted them for use as a bonded warehouse. Eventually, again after various corporate vicissitudes, the first defenders came to operate the warehouse from about 1977 onwards. A bottling line had been installed, initially for whisky only, but later for other spirits. By 1976 bottling of gin and vodka was being undertaken there. A considerable part of the first defenders' business comprised the bottling of spirits for other customers, including the pursuers, in the mid to late 1980s. By 1989 the first defenders were bottling about 800,000 bottles for other companies under contract. This is the context within which we have to consider both the discussions between the pursuers and first defenders in June 1989 about a possible bottling contract and the defenders' use of the name Grant's on their products. I return to that matter at paragraph 55 below.
[13] Meanwhile, in the 1970s the defenders had continued with the business of selling and distributing their spirits, mostly through a team of salesmen who went round hotels, clubs, public houses and other licensed premises in the Glasgow area and, more generally, in the West of Scotland. The first defenders' products were also sold, predominantly, to wholesalers and cash-and-carry proprietors with whom Mr. Bulloch had business relationships. As a result, the first defenders' products would have appeared on the same shelves and on the same lists as the pursuers' products in certain businesses in the West of Scotland (219 - 220). In 1978 the first defenders began to supply gin and vodka to Castle Cash and Carry, which expanded its area of operations in 1983 when it moved to Glasgow. In about 1985 the first defenders entered into a contract with the Spar Landmark group under which they were given access to additional outlets for their High Commissioner whisky and Grant's vodka (41 - 42). But it appears that, until at least 1986, the sales of the defenders' products in retail outlets were relatively small and that bottling made up a large part of their business. This changed in November 1986 when the first defenders lost their bottling contract with Whyte & Mackay. Changes in the defenders' management gave their operations a greater expertise than had previously been available and this led, for instance, to increased sales of white spirits, including gin and vodka, in England and Wales. In particular, the defenders were able to break into the mainstream supermarkets in about 1990 or 1991. This resulted in a dramatic increase in the first defenders' sales on the domestic market from that time onwards.
[14] At one time the market for whisky was distinct from the market in other spirits, in particular from the market in white spirits such as gin and vodka. Although the process had started much earlier, by the mid-1980s the tastes of the public were changing. Among younger drinkers in particular, white spirits, and above all vodka, were popular. These changes in taste led to changes in both wholesale and retail distribution which meant that usually consumers would be presented with a wide range of alcoholic drinks and not merely with closed lists. The result was that the pursuers' whisky products would be appearing in the same market as the first defenders' gin and vodka (182 - 183). The pursuers' whiskies were advertised and marketed as premium products, whereas the success of the first defenders' products was due in large measure to their low price. Indeed, until about 1988, the first defenders did not advertise. This meant that, both within the trade and among members of the public, the defenders were not known as producers of spirits, far less as producers of gin and vodka under the name Grant's. By contrast, of course, both in the trade and among members of the public the name Grant's was recognised and associated with the pursuers (221).
[15] When the first defenders marketed their gin and vodka under the name Grant's, they were able to take advantage of the distinctiveness of the name and of its association with the pursuers' business and products. They were therefore able to take advantage of the investment which the pursuers had made in developing the goodwill associated with the name Grant's. The first defenders used the name Grant's in the mistaken belief that, because Grant's was a name to which they could lay claim historically, through the John Grant companies, they were entitled to use it without any consideration of the consequences when, in the later 1980s, they moved into wider markets, both in the United Kingdom and overseas (213).
[16] So far as overseas markets are concerned, up until the mid 1980s the defenders' sales had been of little importance. The drive to increase sales overseas also began in about the mid-1980s. Mr. Bulloch and others decided to set up the third defenders for the purpose of conducting the export side of the first defenders' business. The company was incorporated in 1988 (38). The evidence showed that the first defenders' business had made considerable progress and that they were exporting to a large number of countries, although it was also clear that they had been faced with legal proceedings by the pursuers, on the basis of their trade marks. These actions had hampered their operations in a number of countries. The evidence also showed that the pursuers' distributors in countries such as Greece, Portugal, Israel and Australia had complained that the arrival of the defenders' cheaper products in their markets had caused confusion to wholesalers and customers. This had affected the sales of the pursuers' products and the image of their brand as a premium product.
[17] It was against this background that the Lord Ordinary concluded (226 - 227) that the first defenders' activities in the production of gin and vodka and its sale under the name Grant's were limited both in volume, geographical area and width of distribution as compared with the business of the pursuers until at least the mid-1980s. Likewise, even when they were about to embark upon the various changes of direction in 1987, the first defenders had acquired only a limited reputation within a limited area of the market as producers of gin and vodka using the name Grant's on the label. I have tried to set out the main features of the growth of the defenders' business and to draw attention to what the Lord Ordinary regarded as the comparatively limited spread of that business until, say, 1987 because the pursuers maintained that these factors were relevant in considering their, admitted, omission to take any formal steps to prevent the defenders from using the name Grant's until 1992. In that connexion, however, it is now necessary to trace the pursuers' knowledge of, and reactions to, the defenders' use of the name Grant's, a use which stretched back to at least 1974 when Mr. Bulloch changed the name of his company to John Grant (Blenders) Limited.
[18] Although counsel for the pursuers suggested that the evidence left doubt as to when the pursuers became aware of what the defenders were doing, I do not consider that, on the facts as found by the Lord Ordinary, that is really so. Somewhat surprisingly perhaps - given that their own products were appearing alongside those of the defenders in certain retail outlets in the 1970s - to judge by the evidence, the pursuers were not aware at all that the defenders were selling vodka and whisky under the name Grant's until 1984. So, by the time they first became aware of what the defenders were doing, the defenders had already been trading in this way, although on a limited scale, for at least a decade. The matter first came to the pursuers' notice in 1984 at an annual review meeting with their employees which the management of the pursuers were in the habit of holding after the Annual General Meeting. One of the employees, who was a publican, had said to Mr. Sandy Grant Gordon that someone was producing Grant's gin. According to Mr. Sandy Grant Gordon, they had looked round to see what was happening. They discovered that the first defenders were producing the gin in question, but it appeared that the operation was fairly limited in volume and not very widespread. He could not remember the detail of what had been done, but his impression was that there did not seem to be a serious problem about sales of vodka with the name Grant's at that time. The upshot was that Mr. Sandy Grant Gordon decided that the pursuers should keep an eye on the matter but this did not involve putting on an elaborate operation. It was just a matter of the pursuers' people on the ground having a look around. In particular, he said that what they discovered on their initial investigation appeared to be distinctly limited and not to be such as to compel them, or to make it sensible for them, to start litigation (Evidence, 272 - 278).
[19] So matters remained for some years. In about 1986 Mr. Alan Wolstenholme, the General Manager of the pursuers' distillery at Girvan, happened to be in Edinburgh when he saw a bottle of the first defenders' Grant's vodka in a shop. He was interested and examined the bottle with some care. When he reported the matter to the pursuers' Secretary, Mr. Allan Denholm, he was told to buy a bottle. Mr. Denholm also indicated to him that the situation was a bit difficult since there were several Grants involved in the whisky industry. Mr. Wolstenholme duly bought a bottle and passed it to Mr. Denholm. Mr. Wolstenholme said that, at that period in the late 1980s, there was a general awareness among the pursuers' employees of the existence of another Grant's gin and vodka. He also indicated that, from what was said, the other products appeared to be giving rise to some confusion. The employees also wanted to know why the pursuers' quality products were not being marketed more vigorously. The general reaction of the management was to the effect that they were aware of what was going on and that they were looking into it or dealing with it.
[20] However, at about this time in the late 1980s, when the scale of the first defenders' operations was increasing, reports about them came to the notice of Mr. Grant Gordon, one of the nephews of Mr. Sandy Grant Gordon, who was working on the sales and marketing side of the pursuers' business. These reports led to discussions among Mr. Sandy Grant Gordon and his nephews in which concern was expressed that the matter was more serious than had first been thought (Evidence, 278). The Lord Ordinary specifically accepted that in the middle of 1989 both Mr. Sandy Grant Gordon and Mr. G. G. Gordon were still unaware that the defenders were exporting products under the name Grant's and, indeed, he found no evidence that at this time the management of the pursuers knew that the first defenders were building up a major white spirits business under that name. The presence of the defenders' products on the market in Scotland and, more particularly, in the United Kingdom as a whole was generally unknown to the public and to a large sector of the wine and spirits trade (283 - 284).
[21] It so happened that at this period the pursuers' need for bottling facilities had outstripped the capacity of their plant at Paisley. Mr. G. G. Gordon had therefore been talking to the first defenders about the provision of bottling facilities for the pursuers' Highland Reserve whisky and about a related exchange, between the pursuers and the first defenders, of malt spirit for grain spirit. The pursuers were also thinking of using the first defenders for bottling certain other products. The fact that the pursuers were interested in using the defenders' bottling facilities and the fact that certain senior figures in the pursuers' management were concerned about the scale of the problem now being caused by the defenders' use of the name Grant's in relation to their vodka and gin products combined to bring about a meeting which was held on 15 June 1989. This meeting was the subject of a great deal of evidence before the Lord Ordinary who made various findings in fact on the basis of his assessment of the reliability of the various witnesses. The extensive exploration in the evidence of the events at this meeting reflected the importance the parties attributed to it in their pleadings. According to the pursuers' averments in Article 5 of Condescendence, at the meeting two representatives of the defenders assured the pursuers' representatives that the defenders would cease to market products under the name Grant's and, in reliance on that assurance, the pursuers were to place orders for certain contract bottling services. For their part, the defenders averred that, at the meeting, Mr. Glen Gordon acknowledged that the defenders were, and would continue to be, free to carry on selling gin and vodka in the United Kingdom under the name Grant's. In the event the Lord Ordinary rejected both of these accounts of what had happened and held in particular that there was no warrant for holding that
"the first defenders, through Mr. Taylor and Mr. Barclay, had any reason to understand that the first defenders were and would continue to be free to carry on selling gin and vodka in the United Kingdom under the name Grant's or that the approach being made to them by Mr. G. G. Gordon was related to cessation by the first defenders of the export of their gin and vodka under the name Grant's" (297).
The Lord Ordinary therefore rejected the defenders' submission that Mr. G. G. Gordon had expressly condoned the use of the name Grant's by the first defenders within the United Kingdom (302). The Lord Ordinary's overall impression was that the meeting had been viewed by those taking part on both sides as exploratory, with a view to future contractual relations between the parties with regard to the pursuers' known requirement for additional bottling capacity over and above that available to them at their Paisley premises. He accepted that the defenders' representatives had given the impression that the first defenders were not averse to phasing out their use of the name Grant's on their products, over a period of time, in exchange for the placing of contract bottling of the nature and extent of that which Mr. G. G. Gordon was proposing to the first defenders (291 - 292). This had led Mr. G. G. Gordon to say subsequently to Mr. Sandy Grant Gordon that "the heat was out of the situation" with regard to the defenders' use of the name Grant's.
[22] Shortly after the meeting Mr. Bulloch was made aware of the general import of the discussion. In addition there was correspondence between the parties which clearly referred to possible contracts between them, under which the first defenders would carry out some bottling for the pursuers. And indeed, later in 1989, the pursuers placed a contract with the first defenders for the bottling of 8,304 bottles of Grant's Royal Whisky. Certain minor orders were placed after that and in about July 1990 the pursuers contracted to sell grain neutral spirit to the first defenders. But, at about that time, Mr. G. G. Gordon became aware that the defenders had no intention of stopping using the name Grant's and he ordered that all future bottling arrangements between the two companies were to cease. In a chance encounter in Paisley at some time before August 1991 Mr. G. G. Gordon "had words" with the defenders' Mr. Barclay about the defenders' continuing use of the name Grant's. The Lord Ordinary held that Mr. Barclay had been somewhat defensive in the face of Mr. Gordon's anger that his expectations from the June 1989 meeting had not been fulfilled. Mr. Barclay had in effect indicated that the responsibility for this lay elsewhere - apparently because Mr. Bulloch had the final say at Glen Catrine and Mr. Barclay could not do anything about that (294). In other words, Mr. Bulloch had not been prepared to stop using the name Grant's.
[23] Until the middle of 1990 the management of the pursuers were under the impression that the first defenders were still willing to enter into negotiations with the purpose of phasing out and then stopping the marketing of their gin and vodka under the name Grant's. Moreover, up until that time the pursuers had no basis for believing that the first defenders were intending not only to move into the export market with those products but also to make material extensions to their marketing of those products in the United Kingdom (302 - 303). In October 1990 the pursuers began an action in the court in Athens that was based on their registered trade marks which had the word Grant's as a prominent feature and which extended to all spirits. Mr. Bulloch then knew that the pursuers were upset about the first defenders' use of the name Grant's (304). The pursuers subsequently raised actions in other countries. They appear to have taken legal advice about the position in the United Kingdom and to have set about obtaining factual material, including the commissioning of a MORI survey (304). In February 1992 the pursuers' agents wrote formally to the defenders seeking an undertaking from them that they would stop using the name Grant's. When no such undertaking was given, the pursuers raised the present proceedings in May 1992.
[24] It should be noted that the use of the name Grant's did not have effect only in relation to the pursuers' products. Rather, by using the name in association with their own products, the defenders were also able to take advantage of the distinctiveness of that name as associated with the pursuers' business, combined with the lack of awareness, both in the trade and, more particularly, among the members of the general public, that the first defenders were producers of gin and vodka bearing that name. In this way they were able to take the benefit of the investment which the pursuers had made in the name as denoting their business as well as their products (213).
[25] It should further be noted that, although in the light of the proof it was clearly established that the defenders had been passing off their products as the pursuers' both at home and overseas, the actual loss sustained by the pursuers was difficult to quantify. While the Lord Ordinary was prepared to hold that there was evidence that the pursuers had lost actual sales in the domestic market by reason of confusion caused to customers, my impression is that the evidence did not go so far as to show that, on the occasions in question, the consumers were specifically looking to purchase spirits produced and marketed by the pursuers or that the pursuers had their own products on sale in the outlets concerned (237 - 238). On the other hand, the evidence in relation to markets abroad did point to retailers being unwilling to stock the pursuers' products in the face of the introduction of the defenders' products which risked affecting the status of the pursuers' products as high-quality, high-value goods. Moreover, more generally, the introduction of another product bearing the same name, but aimed at a lower price level in the market, could only serve to threaten the perception of the quality of the pursuers' products, with corresponding damage to the pursuers' brand name (244 - 249). The existence of the defenders' gin and vodka on the market under the name Grant's also restricted the ability of the pursuers to exploit their brand name fully (249 - 250). In all the circumstances the Lord Ordinary found it impossible not to infer that there had been actual damage, or at least a likelihood of damage, to the pursuers' business in the United Kingdom. The same applied to their business abroad by reason of the defenders' expansion into the export market. The damage or likely damage went far beyond what could reasonably be considered to be minimal or trivial (250). Having analysed in detail a large body of evidence relating to the quantification of the damage to the pursuers' brand, the Lord Ordinary concluded that the defenders' use of the name Grant's had reduced the value or potential value of the pursuers' business by some millions of pounds, having regard to the damage to their goodwill in areas where the defenders were already in competition with the pursuers and in the wider world market where the defenders would eventually compete, if not stopped.
[26] On the basis of the facts as he found them, the Lord Ordinary granted interdict, broadly reflecting the terms of the second conclusion, against the defenders
"from passing off or enabling others to pass off as, and for, the pursuers' products any gin, vodka or other alcoholic beverage not of the pursuers' blending or merchandise and in particular from labelling, packaging, marketing, exporting, wholesaling or retailing of gin, vodka or any other alcoholic beverage not of the pursuers' blending or merchandise under the name 'Grant's' or other name colourably similar thereto or otherwise calculated to deceive or confuse the public or to induce the belief that the products of the defenders are in any way connected with those of the pursuers" (Supplementary Opinion, 21).
He also ordained them, in a modified version of the third conclusion,
"to deliver up to the pursuers within 14 days all bottles, labels, caps, cases, cartons and other similar items held by them or anyone on their behalf in Scotland which bear the name 'Grant's' or other name colourably similar thereto" (Supplementary Opinion, 21).
The Lord Ordinary did not grant the interdict sought in the first conclusion against the defenders from passing off their business as the pursuers'.
[27] Acquiescence
The contention for the defenders in their first ground of appeal was that the facts which I have outlined showed that the pursuers had acquiesced in the defenders' use of the name Grant's in relation to their gin and vodka. The issue was focused in the defenders' sixth plea-in-law, which in its amended form was to this effect:
"Esto, which is denied, the defenders' use of the name 'Grant's' amounts to passing off, the pursuers or their predecessors having been aware of the same since at least 1984, are personally barred by acquiescence and delay from insisting in the present action."
As I have just noted, in the interlocutor against which the defenders are reclaiming, the Lord Ordinary granted a final interdict against the defenders from passing off their products as the pursuers' and an order for the defenders to deliver up various items to the pursuers. Significantly, the pursuers did not seek damages for loss caused by the defenders' passing off. So the conclusions of the present action are for remedies which look to the situation after the raising of the action in 1992. In other words, although the proof was concerned with events over many years, and in particular from 1972 onwards, these facts are of relevance only for establishing that the defenders had indeed been passing off their products as the pursuers' and that they were likely to continue to do so, unless stopped by the court. The defenders' sixth plea-in-law is therefore concerned to establish, not that the pursuers were barred from pursuing a remedy, say, of damages in respect of completed acts of passing off, but that they were barred from pursuing the remedy of interdict to prevent the defenders from continuing to pass off their products as the pursuers' in the future. In other words, the defenders say that, by failing to assert their rights to stop the defenders' passing off from at least 1984 until they raised the present action in 1992, the pursuers are barred not only from asserting their rights in respect of the passing off which occurred during that period but also from asserting their rights in respect of passing off by the defenders for all time coming. The effect of their failure to take action was therefore much the same as if they had granted the defenders a licence to pass off their products as the pursuers' in perpetuity.
[28] I have spelled out the nature of the defenders' plea in order to emphasise that it is concerned, not with acquiescence in past wrongs, but with acquiescence in future wrongs. The character of the plea in this case needs to be kept in mind when the authorities are examined, since many of them are concerned with pleas of acquiescence tabled as a defence to an action of damages in respect of completed wrongs. I return to this aspect of the case at paragraph 47 below. It should also be noted that defenders' counsel accepted that, despite the general terms in which their plea is couched, it could apply only in respect of the domestic market. In other words, they did not argue that the pursuers had acquiesced in the defenders passing off their products as the pursuers' in overseas markets. But the defenders' contention was that, given the way in which the conclusions for interdict were framed and the basis upon which they would operate to prevent passing off overseas, the pursuers would not have any basis for interdicting the defenders from passing off overseas if they were barred by acquiescence from obtaining interdict in terms of either of their first two conclusions, which had effect in relation to both the home and overseas markets.
[29] The defenders' sixth plea is framed in terms of personal bar. In modern Scottish legal parlance we use the expression "personal bar" without perhaps giving much thought to the significance of the adjective "personal" in that phrase. In earlier days the defence was referred to as a "personal objection" or "personal exception", which is how it is described, for instance, in Bell's Dictionary. It is a defence, or exception, which is "personal" because it arises out of the actings of the pursuer. The defender, who might have no defence to proceedings of a similar kind raised by someone else, can defend himself against proceedings raised by that particular pursuer because of something which the pursuer has done or not done. This fundamental characteristic of the plea underlies the classic formulation of Lord Birkenhead L.C. in Gatty v. Maclaine 1921 S.C. (H.L.) 1 at p. 7:
"The learned counsel cited various authorities in which these doctrines have been discussed, but the rule of estoppel or bar, as I have always understood it, is capable of extremely simple statement. Where A has by his words or conduct justified B in believing that a certain state of facts exists, and B has acted upon such belief to his prejudice, A is not permitted to affirm against B that a different state of facts existed at the same time. Whether one reads the case of Pickard v. Sears (1837) 6 A.& E. 469, or the later classic authorities which have illustrated this topic, one will not, I think, greatly vary or extend this simple definition of the doctrine."
As there stated, the plea is clearly one which B could maintain only against A because it arises out of what A himself has done and its prejudicial effect on B. Equally clearly, the Lord Chancellor is describing a plea which corresponds, in broad terms at least, to estoppel by representation in English law.
[30] Mr. Jones, Q.C., on behalf of the defenders argued that Lord Birkenhead's description of the plea contained various elements which were to be found in pleas of personal bar but that it should not be interpreted as meaning that all these elements required to be present in every case where the plea operated. The elements which had to be established in any given case depended on the legal nature of the dispute and the kind of personal bar which the defender sought to rely upon. Here we were concerned with the plea of acquiescence as a defence to an action of interdict against passing off. Such an action would be barred at the instance of a pursuer, if the pursuer had consented to the defender passing off his product as the pursuer's. There was no presumption that any consent was irrevocable: whether or not it was so would depend on the circumstances of the particular case. Therefore, the plea of acquiescence could operate where the defender acted, the pursuer remained silent, the defender changed his position to his prejudice and the pursuer then complained. The court would say to the pursuer: you did not complain before, matters have moved on, and it is now too late to complain. These elements constituted the D.N.A. of the plea of acquiescence.
[31] Mr. Jones' genome of the plea of acquiescence differed in at least one critical respect from that of pleas of personal bar in general, as described by Lord Chancellor Birkenhead. According to Mr. Jones, the plea of acquiescence can bar an action without the defender having acted to his prejudice upon a belief as to a certain state of facts induced by the pursuer's words or conduct. It is enough if the pursuer remains silent in such a way as to indicate his consent to the defender's actings and the defender changes his position to his prejudice, even if the defender does not do so because he is relying on the pursuer's apparent consent. This analysis of the plea was central to Mr. Jones' presentation of this part of the case since he accepted that, on the facts, the first defenders did not use the name Grant's because they believed that the pursuers had consented to them doing so. Rather, they used the name because Mr. Bulloch in particular believed that they had a right to do so by reason of the historical association of the name Grant's with John Grant (Wine and Food) Limited, later John Grant (Blenders) Limited. Mr. Jones therefore acknowledged that, if actings in reliance on a belief induced by the pursuers were indeed essential to a successful plea of acquiescence, the defenders' sixth plea would have to be repelled.
[32] Mr. Jones' analysis of the operation of acquiescence decouples the pursuer's consent from the defender's subsequent acting. They need have no connexion with one another. On that analysis it is hard to see why the doctrine combines the two distinct elements in this way. After all, in the case of a delict the positive consent of the pursuer to what would otherwise be a wrong means that no wrong is committed, since volenti non fit iniuria. For this reason a defender who can establish the pursuer's consent has a good defence whether or not he has acted to his prejudice. Proof of his own prejudicial actings would be irrelevant. And indeed, at times during the debate before us, it seemed to me that counsel for the defenders came close, at least, to analysing the situation in this way: what they were asking the court to do was to infer from the facts that the pursuers had in effect granted the defenders an irrevocable licence to pass off their products as the pursuers'. Perhaps because they recognised that in the real commercial world the pursuers would have been rather unlikely, to say the least, to grant the defenders such a licence and that the court would need to have correspondingly compelling evidence and facts before it could hold that the pursuers had impliedly done so, in the end counsel for the defenders preferred instead to present their defence as one of acquiescence, but with the element of reliance stripped out. In essence, the pursuers were to be barred because of their failure for some eight years to take proceedings to stop the defenders and because of the defenders' development of their business in the meantime. It is therefore necessary to consider the authorities on acquiescence to see whether the doctrine can indeed be applied in the manner for which Mr. Jones contended.
[33] One among many curious and remarkable features of this general area in Scots law is that the doctrine of waiver was not properly recognised until the decision of the House of Lords in Armia v. Daejan 1979 SC (HL) 56. In the course of his speech (at p. 72) Lord Keith of Kinkel had occasion to comment on the nature of waiver:
"The topic of waiver may arise in a number of guises in a variety of contexts. The truth is that it is a creature difficult to describe but easy to recognise when one sees it, subject to the proviso that it is on occasion difficult to distinguish it from variation of a contract. In English law attempts to mitigate the rigours of the doctrine of consideration have led to introduction of concepts of equitable estoppel and promissory estoppel in situations where that doctrine rules out a finding of agreed variation of contract. Scots law would not, I think, be disposed to follow English law down such paths, in the absence of corresponding considerations of justice which might commend such a course. So I would not accept today that no important juridical differences exist between personal bar in Scotland and estoppel in England."
This passage is of importance in the present case for two reasons. First, it contains a warning that the doctrines of estoppel and personal bar do not necessarily coincide. That remains true even though the description of personal bar given by Lord Chancellor Birkenhead in Gatty is very clearly influenced by, for instance, the formulation of estoppel by representation by Lord Denman C.J. in Pickard v. Sears, to which he refers, or by Lord Cranworth L.C. in West v. Jones (1851) 20 L.J. Ch. 362 at p. 363. Secondly, Lord Keith's observation points to the fact that one at least of the functions of the doctrine of estoppel, and similarly of personal bar, has been to mitigate what would otherwise appear to be the unduly harsh effects in particular circumstances of the strict application of some rule of law. Of course, the rules of Scots and English law differ in many respects and so the occasions when the doctrines of personal bar and estoppel may require to be invoked for this purpose will also be different. For instance, the doctrines of rei interventus and homologation are treated as part of the law of personal bar in Scotland. See Rankine, Personal Bar, p. 1. And one way, at least, of looking at their function when applied in relation to land is that they were used to mitigate the rigours of the law which, before the Requirements of Writing Act 1995, meant that writing was needed for the constitution of obligations relating to land. In the absence of a written agreement, the parties had a locus poenitentiae in which they could resile from the informal agreement. Obviously, if this doctrine had been applied strictly, it could have worked injustice where one or other of the parties had acted on the basis that the agreement would be performed. This potential injustice was mitigated by the doctrines of rei interventus and homologation which raised "a personal exception", excluding the locus poenitentiae and so, in effect, making the obligation binding: Bell, Principles, paragraphs 26 and 27. This is merely one example of the way in which personal bar may operate to respond to the particular challenges presented by the native doctrines of Scots law.
[34] It is therefore of some importance to notice that the main discussion of acquiescence by Bell, to which both parties referred, is contained within Chapter XII of his Principles, entitled "Of Ownership of Land". The first distinct section within that chapter deals with the "Exclusive Use" of the owner's land and Bell explains that the owner has the right to the exclusive occupation and use of his land. This means that he has a right to prevent various encroachments on to his land, however inoffensive. See paragraphs 941 - 944. It is within this general context that Bell comes, in paragraphs 945 and 946, to deal with the effect of acquiescence. In those parts written by Bell himself, he says:
"945 The exercise of the exclusive right may be barred by acquiescence. This doctrine has of late acquired considerable importance from the effects ascribed to it; and it is necessary to distinguish clearly the principle on which it depends.
946 The principle seems to be, that mere acquiescence may, as rei interventus, make an agreement to grant a servitude, or to transfer property, binding, or may bar one from challenging a judicial sentence; but that where there is neither previous contract nor judicial proceedings, there must be something more than mere acquiescence, something capable of being construed as an implied contract or permission, followed by rei interventus. Where great cost is incurred by operations carried on under the eye of one having a right to stop them or where, under the eye and with the knowledge of him who has the adverse right, something is allowed to be done which manifestly cannot be undone, the law will presume an agreement or conventional permission as a fair ground of right."
This passage cannot be read in isolation from what Bell has already said about rei interventus in paragraph 26:
"Rei interventus raises a personal exception, which excludes the plea of locus poenitentiae. It is inferred from any proceedings not unimportant on the part of the obligee, known to and permitted by the obligor to take place on the faith of the contract as if it were perfect; provided they are unequivocally referable to the agreement, and productive of alteration of circumstances, loss, or inconvenience, though not irretrievable."
[35] In paragraph 946 Bell is considering the doctrine of acquiescence as an aspect of rei interventus, which may operate in one of two ways to bar the landowner's exclusive right. First, where there is an (informal) agreement to create a servitude or to transfer property, acquiescence may make the agreement binding and so affect the landowner's rights. But where there is no such previous informal contract, you have to find, first, "something more than mere acquiescence", something which is capable of being construed as an implied contract or permission, and then, secondly, rei interventus. As Lord Chelmsford L.C. noticed in Bargaddie Coal Company v. Wark (1859) 3 Macq. 467 at p. 480, the passage suggests that the acquiescence which will support and give validity to a prior parole agreement is something less than the facts and circumstances which will be required to presume an agreement. Nevertheless, the example which Bell gives must be intended to illustrate the operation of the doctrine in circumstances from which an agreement or permission can be inferred. What Bell seems to envisage is that someone who could stop, say, costly building operations, sees those operations being carried out and does nothing, or else he sees some manifestly irreversible step being taken and does nothing to stop it. In these circumstances the law presumes that there is an agreement or conventional permission for the work to be done or the step to be taken. That agreement or conventional permission is rendered binding by the kind of costly operations or irretrievable step, which would constitute "proceedings" of the kind envisaged by Bell in his discussion of rei interventus in paragraph 26. But it is, of course, of the essence of the doctrine of rei interventus, as there described by Bell, that the "proceedings" should take place "on the faith of the contract as if it were perfect" and that they should be "unequivocally referable to the agreement". It follows, in my view, that in paragraph 946 Bell analyses the situation as one where the party carrying out the operations, or taking the irretrievable step, does so on the faith of the consent or conventional permission which he has assumed to exist, on the basis of the other party seeing what is happening and doing nothing to stop it. It follows that Bell's analysis does not support Mr. Jones' theory that acquiescence can give rise to personal bar even without reliance.
[36] The same doctrine was applied by the Second Division in Cowan v. Lord Kinnaird (1865) 4 M. 236. The pursuers, as lower proprietors, sought a declarator that certain operations by the defender, an upper proprietor, had unlawfully diverted a large volume of water from its natural channel and so had prevented it from flowing to the pursuers' lands. The pursuers also sought an order requiring the defender to remove the relevant dams, embankments and other works. See the report of the earlier stage in the proceedings: (1863) 1 M. 972. The defender pled inter alia that the pursuers and their predecessor in title, Mr. Miller, had acquiesced in the operations: Mr. Miller "saw and well knew of the operations now complained of being executed, and acquiesced in and agreed to the same being executed." The court held that the averments of acquiescence were irrelevant. Lord Justice Clerk Inglis said (at p. 241):
"But then it is said that Mr. Miller saw and well knew of the operations now complained of, and notwithstanding remained silent. That may be so. Suppose Mr. Miller in 1843 did not think fit at once to challenge these operations, and although knowing them to be illegal, yet perhaps not wishing to quarrel with his neighbours, said nothing about it, does it follow that his singular successors are debarred from challenging the illegal operations? I think that a party may stand by and see an illegal act done without challenging it for many reasons, but still with no intention of consenting, and yet acquiescence is nothing but implied consent. Nothing in what is alleged implies that Mr. Miller consented, and still less that he consented so as to bind his singular successors for ever."
The Lord Justice Clerk went on to hold that it was not sufficient to bar an injured party that for a number of years he had been silent: the law of acquiescence had never gone that length and mere silence would never bar a right to complain of an illegal encroachment upon property. Lord Cowan (4 M. at pp. 243 - 244) referred specifically to paragraph 946 of Bell's Principles which he adopted as a correct statement of the law. Applying the law as stated by Bell, he held that the defender's averments of acquiescence were irrelevant, both because, during the debate, counsel had admitted that there was no agreement at all and because the averments omitted to set forth that any expensive erections were made by the defender without objection by the pursuers. Clearly, he was analysing the averments in terms of Bell's two requirements of an agreement and rei interventus. Similarly, Lord Neaves (4 M. at p. 244) distinguished the Bargaddie Coal Co. case on the ground that the averments in that case set forth that something had been done by the defenders which could not be undone and the question was whether it had been done with the consent of the pursuer. In Cowan, by contrast, there was no averment of res gestae or rei interventus.
[37] The Cowan case was decided in December 1865. Some months earlier, in February of the same year, the Second Division, including Lord Justice Clerk Inglis, had decided Duke of Buccleugh v. Magistrates of Edinburgh (1865) 3 M. 528. The pursuers, as trustees of the Assembly Rooms in George Street in Edinburgh, wished to enclose the space between two pillars of a portico resting on an arcade, built some thirty years before. The pillars of the arcade projected two feet into the public street - and the Magistrates had acquiesced in that encroachment. The Magistrates objected to the proposed operation on the ground that their acquiescence had been confined to the erection of the particular arcade and portico. The court held that, since the acquiescence in the encroachment had not been qualified, the Magistrates were not entitled to object to the proposed alteration. In the course of his opinion Lord Justice Clerk Inglis said (at p. 531):
"The general rule of law unquestionably is inaedificatum solo, solo cedit, but that rule is subject to several qualifications and exceptions. If I build on my neighbour's ground, knowing it to be his ground, and behind his back, and without his knowledge, or against his remonstrance and protest, the rule will be enforced against me, and the building will be held to be his property; or if the building encroaches to a small extent only he will be entitled to have that portion removed, and to have his ground cleared. But it is equally clear that if the building is erected with the consent of the owner of the ground, he cannot be heard to complain of that which has been done with his consent; and that consent may be inferred from facts and circumstances. If I build on my own ground, and a few inches, or a few feet beyond, on my neighbour's ground, and if he stands looking on without objecting, he will be held to have given a tacit consent to my operations, which will have the same effect as express consent. This is the foundation of the doctrine of acquiescence, which, however, is a doctrine that must be carefully guarded, especially when it affects heritable rights. The facts from which acquiescence is to be inferred must be such as to leave no reasonable doubt as to what was the intention of the parties at the time."
Again, although - as often - he does not cite authority, Lord Justice Clerk Inglis appears to have had in mind the doctrine of acquiescence as described by Bell. He envisages, as Bell does, the situation where the neighbour "stands looking on without objecting" as the building operations which encroach a short distance on to his land take place. His silence in that situation is construed as the giving of tacit consent to the encroachment and that is treated as the equivalent of express consent. The Lord Justice Clerk says that the doctrine of acquiescence must be carefully guarded "especially when it affects heritable rights". He must therefore be envisaging that the tacit consent is followed by building operations which amount to rei interventus - and the result is that the heritable rights of the acquiescing neighbour are affected. I understand the Lord Justice Clerk's observations in this passage as being to the same effect as his later observations in Cowan. That being so, they do not support the view that acquiescence can arise where the defender does not rely on the implied consent of the pursuer.
[38] It has to be said that not all the cases on acquiescence to which we were referred were easy to reconcile. Moreover, most of them concerned infringements of rights in heritable property and, for the reasons which I have sought to explain, that provides a particular framework for the discussion. Those cases are, therefore, distinguishable from the present case. It may also be that, if the doctrine of waiver had come to prominence in our law at an earlier date, some at least of the building cases could have been analysed in terms of that doctrine, as Oliver J., as he then was, suggested of Wilmott v. Barber (1880) 15 Ch D 96 in Taylors Fashions Ltd. v. Liverpool Trustees Co. Ltd. (Note) [1982] QB 133 at pp. 146 C - D and 147 D - E. As the defenders have no plea of waiver, however, we heard no detailed submissions on the point and I accordingly express no view on it, especially since the present case is concerned with interdicting wrongs which lie in the future. What is in any event of importance is that, in the Scottish cases which counsel examined, the analysis was not in terms of waiver but in terms of acquiescence in the form of an implied representation of consent and actings in reliance on that consent. When analysed in this way, the doctrine of acquiescence in these cases falls, in my view, within the terms of Lord Chancellor Birkenhead's short statement of the principle of personal bar in Gatty v. Maclaine.
[39] The present case has nothing to do with heritable property and it is therefore necessary to see how the plea of acquiescence has been held to operate in other kinds of cases. For this purpose, as counsel recognised, the most important guidance is to be found in the speech of Lord Campbell L.C. in Cairncross v. Lorimer (1860) 3 Macq. 827, reported in the Court of Session as Cairncross v. Meek (1858) 20 D. 995. The case arose out of one of the many religious disputes which prevailed in Scotland in earlier centuries and which could pose formidable problems for the courts, as, for example, in Craigdallie v. Aikman (1813) 1 Dow 1 and (1820) 2 Bligh 529. In Cairncross the events centred on a congregation in Carnoustie, known at the relevant time as the "Congregation of United Original Seceders in Carnoustie". The congregation worshipped in a chapel, and the minister lived in a house, built on land which had been disponed to trustees for this purpose in 1829. In May 1843 came the Disruption and the emergence of the Free Church of Scotland. In due course, on 27 April 1852, the Associate Synod of the United Original Seceders brought forward an overture, which contemplated that they should unite with the much larger Free Church. The overture was carried by a majority of the Synod and, the following month, a representation and appeal was presented to the General Assembly of the Free Church which resulted, on 1 June, in the Assembly agreeing to the union and to admit the Synod into their association. Two days later, the proposal that the Carnoustie congregation should unite with the Free Church was discussed at meetings of the congregation and kirk session. At the kirk session there was no dissent on the matter, while at the meeting of the congregation there was some dissent but no division. On 6 July the minister of the congregation, the Rev. James Meek, presented himself to the Free Presbytery in Arbroath. His name was then added to the roll of the presbytery and the congregation were received as being under the charge of the presbytery: they were now the Free Church Congregation formerly attached to the Associate Synod of Original Seceders. The minister and the congregation who had united themselves with the Free Church in this way kept possession of the ground and the church and house.
[40] So matters stood until July 1856 when the pursuers raised an action against Mr. Meek and other trustees, containing five conclusions for declarators to the effect that the church land and other property belonged to them as members of the congregation sometime known as the United Original Seceders in Carnoustie in association with the Associate Synod of United Original Seceders. To put the matter briefly, they claimed that the defenders had not adhered to the doctrines of the United Original Seceders and that, in terms of the trust deed, the pursuers were entitled to the subjects since they, by contrast, had adhered to the original doctrines. The pursuers also concluded for decree, if necessary, ordaining the defenders to dispone the property to two of the pursuers, as the only surviving and continuing trustees for the congregation of United Original Seceders. The Lord Ordinary pronounced decree in terms of the declaratory conclusions. The defenders reclaimed and the Second Division allowed a proof before answer in respect of their plea "That [the pursuers] were barred from insisting in the action." On consideration of the proof, the court sustained the defenders' plea and assoilzied the defenders. The importance of this plea can be seen by contrasting the decision in Cairncross with the decision in Couper v. Burn (1859) 22 D. 120 where there was no such plea and where those opposed to the union with the Free Church were successful.
[41] Mr. Jones relied, in particular, on the opinion of Lord Justice Clerk Inglis who said this (20 D. at p 1001):
"I am of opinion that this action has not been raised by parties who took in time their stand against the union in question with the Free Church, and constantly [consistently - 30 Scottish Jurist 611 at p. 615] and bona fide followed out, debito tempore, their opposition.... I look simply to the facts in this case. Now, first, the union was carried through the session without dissent; and again through the congregation without division. Then, when the union was thus consummated, it became clearly necessary for parties meaning to oppose, if not already too late, instantly to take their ground in a distinct and decided manner, so as to raise the issue or contest between them and the majority of the congregation. Now, I think it very clear that such an issue was not tempestive raised and insisted in by any of the pursuers. Looking to the straggling facts exhibited in the proof as to each of the pursuers, it is to me very clear that the action is an afterthought, got up at last by the success of their advisers in other cases, and was not bona fide begun, announced, and carried on by proper dissenters, entitled to follow out their original opposition, and who had, debito tempore, begun and recorded their opposition so as to make the property of the church a disputed litigated question from the time when the union was proposed, or as soon after as could be. The union, in my opinion, passed, and stood without any real challenge for three years - not disturbed or interfered with, and with possession, openly and exclusively in terms of the union - in public assertion of the competency of this union - without any interruption or challenge. On the facts exhibited in the proof, I am of opinion that, originally, there was really no distinct opposition, and the change took place and endured without any opposition, and now cannot be disturbed by these pursuers. I think judgment ought to be pronounced sustaining the second plea in law for the defenders, so as to protect the defenders from molestation."
Having heard the opinions of the other Judges, the Lord Justice Clerk added (at p. 1005):
"I am rather anxious to state that I avoid any general ground. I think it is not necessary to prove concurrence on the part of the pursuers in the proceedings now challenged. My opinion is founded on something of a more negative character. The defect in the pursuers' case is, that no step was taken, debito tempore, to challenge the union."
Both Lord Wood and Lord Cowan agreed with the Lord Justice Clerk's reasoning on this point, while Lord Murray concurred in the result on the basis of another aspect of the Lord Justice Clerk's reasoning, that, in the circumstances, the pursuers had no title to challenge what had been done by the whole congregation and their minister without opposition.
[42] What had mattered in Lord Justice Clerk Inglis' view, said Mr. Jones, was simply the pursuers' delay in objecting to the defenders' actings and the defenders' subsequent change of position to their prejudice before the pursuers had initiated proceedings. We should apply the same approach in this case and hold that the pursuers had not raised their action tempestive or debito tempore. In advancing their argument, counsel for the defenders accepted that, on the basis of the Lord Ordinary's findings, it was impossible for them to suggest that, by acting as they had done, the defenders had acted to their prejudice in the sense that they had acted in such a way that they had already suffered loss. On the contrary, it appeared that by continuing to market their products under the name Grant's the defenders had made profits and had generally prospered. But, counsel said, it was sufficient that they had altered their position and that, if their plea of personal bar were repelled and interdict were granted, they would suffer loss. Beyond pointing out that in Cairncross the Lord Chancellor had not spelled out any concrete loss which the defenders had already experienced as a result of relying on the pursuers' failure to object, counsel for the defenders did not develop this submission by reference to authority. It appears to me, however, that, in this limited respect, the defenders' submission is consistent with what Dixon J., as he then was, had in mind in a luminous passage in Grundt v. Great Boulder Pty. Gold Mines Ltd. (1937) 59 C.L.R. 641 at pp. 674 - 675 when he said that the basal purpose of the doctrine of estoppel
"is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice."
I am prepared to test the defenders' case on the basis that this passage does indeed capture the essence of the requirement of prejudice in cases of this kind. Of course, Dixon J. proceeds on the basis that the defendant has altered his position on the faith of an assumption from which the plaintiff departs in bringing the action. In that respect his approach is, fundamentally, at odds with the approach advocated by Mr. Jones.
[43] When faced with a submission that the pursuers have in effect lost the right to bring proceedings, one cannot help remembering the wise observation of Lord Deas, some years after Cairncross, in MacKenzie v. Catton's Trustees (1877) 5 R. 313 at p. 317:
"There must either be prescription or not. We are not to rear up new kinds of prescription under different names."
It appears to me that, if the court concentrated - as the defenders argued it should - exclusively on the pursuers' failure to object to the defenders' actings over a considerable period, the court would in reality be rearing up a new kind of prescription to supplant the prescription enacted by Parliament in Section 11 of the Prescription and Limitation (Scotland) Act 1973. But, in any event, when considering Cairncross, this court must have regard not to the opinions of the judges of the Second Division but rather to the speeches in the House of Lords, especially the speech of the Lord Chancellor. That speech certainly does not support the view that the proper approach was to focus simply on the pursuers' delay in objecting to the union.
[44] The Lord Chancellor said (3 Macq. at pp. 829 - 830):
"It is enough to observe that the present Pursuers bring this action as individuals for a personal wrong, which they individually suffer from the wrongous intromission of others. Therefore, in this case, first, the maxim will apply 'Volenti non fit injuria;" and, secondly, the doctrine will apply which is to be found, I believe, in the laws of all civilised nations, that if a man, either by words or by conduct, has intimated that he consents to an act which has been done, and that he will offer no opposition to it, although it could not have been lawfully done without his consent, and he thereby induces others to do that from which they otherwise might have abstained, - he cannot question the legality of the act he had so sanctioned, - to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct.
Both these defences are set up to the present action.
There is strong evidence to support the first, and to show that, according to the rules which govern the proceedings of deliberative assemblies, the union of the Associate Congregation of Seceders at Carnoustie with the Free Church, the Pursuers being present, was carried nemine dissentiente. But on this point there is some conflicting evidence, and there may be a difference of opinion, and therefore I do not make it the reason of my decision. I agree with the Lord Justice-Clerk and the other Judges, who thought that 'it is not necessary to prove concurrence on the part of the Pursuers in the proceedings now challenged, and that proof of positive assent or concurrence is not necessary.' I am of opinion that, generally speaking, if a party having an interest to prevent an act being done, has full notice of its having been done, and acquiesces in it, so as to induce a reasonable belief that he consents to it, and the position of others is altered by their giving credit to his sincerity, he has no more right to challenge the act, to their prejudice, than he would have had if it had been done by his previous licence. We are asked what the Scotch Judges mean by tempestive or in debito tempore; and in analogy to the rules of negative or positive prescription, how many years, months, or days constitute 'debitum tempus?' I answer that it is not to be measured by any cycle of the heavenly bodies, and it must depend upon the circumstances of each particular case. The objection must be made before there has been such acquiescence, with knowledge, as to induce a reasonable belief that the act will not afterwards be challenged. The owner of a mill to which all the lands in a barony are thirled, if he sees an occupier of land within the barony erecting a grist-mill, must not placidly look on till the new mill has been completed, and the miller has established a thriving business by laying out all his capital upon it, and then bring an action for damages, praying for an interdict, with a petitory conclusion that the mill may be prostrated as having been illegally erected."
This statement of the law of acquiescence has never been challenged and has been applied in subsequent cases both in England and Scotland. The relevant passage in Halsbury's Laws of England (fourth edition reissue), Vol. 16, "Equity", paragraph 924, approved by Sir Christopher Slade in Farmers Build Ltd. v. Carier Bulk Materials Handling Ltd. [1999] RPC 461 at p. 488, is to much the same effect. See also paragraph 955 and footnote 4. The decision in Cairncross is, in any event, binding upon this court. The Lord Chancellor could not have made it clearer that the bar to a pursuer proceeding arises only where two conditions concur: first, the pursuer acts in such a way that he intimates that he consents to an act which has been done and, secondly, he thereby induces others to do that from which they might otherwise have abstained. In other words, the pursuer acquiesces in an act so as to induce a reasonable belief that he consents to it, and the position of others is altered by their giving credit to his sincerity. In Cairncross the pursuers did not dissent from the decisions to unite with the Free Church, nor did they promptly raise proceedings. In reliance on their apparent consent, a month later, Mr. Meek took the formal step of having his name added to the Free Presbytery roll and of having the congregation placed under their supervision. Mr. Meek and the congregation remained in the church buildings and in the manse. This had been the apparently settled position for some four years before the action was begun. It is thus essential to the doctrine as laid down and applied by the House of Lords that the defender should have been induced to act and change his position by his reasonable belief that the pursuer was consenting. We cannot hold otherwise.
[45] Moreover, the Lord Chancellor uses the defender's actings as a crucial element of his solution to the, otherwise telling, question posed by counsel for the pursuers in Cairncross: how was one to define what was meant by objecting debito tempore or tempestive? He held that the objection had to be made before there was such acquiescence, with knowledge, as to induce a reasonable belief that the act would not afterwards be challenged. He went on to say that the owner of a mill to which all the lands in a barony were thirled could not look on placidly until an occupier of land within the barony had finished erecting a grist-mill and had laid out his capital on it. It is plain that the Lord Chancellor considered that the pursuer had to object before the defender had, for instance, done works or spent money in the belief that his actings would not be challenged. The tempus within which the pursuer must object or raise his action is therefore defined by the point at which the defender acts in reliance on the belief that the pursuer will not challenge his actings. The two elements are inextricably bound together in the doctrine as laid down by the Lord Chancellor.
[46] If the approach prescribed by the House of Lords in Cairncross is applied to the facts in this case, then, as Mr. Jones accepted, the defenders' sixth plea-in-law must be repelled. This is because, as he acknowledged, on the facts found by the Lord Ordinary, the defenders did not exploit the name Grant's because they believed that the pursuers had consented to their doing so, but rather because they believed that they had a right to do so. To adopt a formula used by Oliver J. in Taylors Fashions [1982] Q.B. at p. 156 C - D, even if the defenders acted "in" the belief that the pursuers consented to their passing off their products as the pursuers', they did not act "on the faith of" that belief.
[47] But there is another, equally important, reason for repelling the defenders' plea. As I highlighted in paragraphs 27 and 28, the defenders invoke the plea of acquiescence, not to bar an action of damages by the pursuers for loss suffered due to the defenders' completed acts of passing off, but in order to bar the pursuers' conclusions for interdict against acts of passing off which the defenders will commit in the future. In Earl of Kintore v. Pirie & Sons Ltd. (1903) 5 F. 818 at pp. 838 - 839, Lord Kyllachy went so far as to say that acquiescence could never have this effect:
"Now, I am not aware that the doctrine of acquiescence - taking it at its widest - has ever been applied to a case of this kind. Acquiescence may bar objection to what is past, - to what has been done. But it can never, so far as I know, establish directly or indirectly a continuing and perpetual right. I may have allowed my neighbour, it may be for years, to draw and to use, say my share as well as his own of a certain stream or other water supply; but I may resume my own share at my pleasure. Nor will it, I suppose, be a bar to my doing so, that my neighbour has, relying on my continued consent, spent money, say, in enlarging his mill or in taking water into his house. And similar illustrations may be readily figured. The truth is that, to serve the defenders' purpose, what they call acquiescence would require to be something of the nature of an agreement."
See also the further remarks of Lord Kyllachy in British Linen Bank v. Cowan (1906) 8 F. 704 at p. 712. In Robson v. Chalmers Investment Company Limited 1965 S.L.T. 381, however, Lord Kissen was indeed able to find that the respondents' acquiescence had had the effect of barring them from requiring the removal of a water supply to the petitioner's cottage or indeed from objecting to certain further, limited, works which were needed to make it adequate for domestic purposes. The petitioner was therefore entitled to interdict against the respondents from interfering with the water supply. After a meticulous review of the authorities, Lord Kissen said (at p. 387):
"To put the matter in another way, a Court can spell out of the whole facts and circumstances of a case, including the nature of the acquiescence, a consent for the future which will bar the acquiescing party from effectively objecting to what the other has done. (Rankine on Personal Bar, pages 55 and 59). This tacit consent which is to be inferred from facts and circumstances will have the same effect as an express consent. (Per L.J.C. Inglis in Duke of Buccleuch (supra), at page 531). One of the facts and circumstances which is of importance is whether the operations which have been acquiesced in are serious and have incurred great cost. (Muirhead (supra), at page 427 and Bicket (supra), at page 49). The question really is whether, from all the facts and circumstances, a Court can hold that there has been an implied agreement to the operations being done without the right to the party acquiescing to withdraw his consent after the operations are completed. If the proper inference from all the facts is that the assent was to a permanent right and not merely to an accommodation removable at pleasure, there is a bar to removal."
His Lordship opined, rightly in my view, that Lord Kyllachy's views in Earl of Kintore were not different in essence from his own views. Lord Kissen's decision was reclaimed to this Division (20 May 1966) and appealed to the House of Lords (20 June 1967) in proceedings which are unreported. His views on the law of acquiescence were upheld obiter by Lord President Clyde, with whom the other judges concurred. The Lord President observed that "the doctrine of acquiescence is an equitable doctrine" which fell to be applied in that spirit to the circumstances of the case. The House of Lords found it unnecessary to deal with the point. The opinions and speeches can be studied in the Appeal Cases 1951 - 1970 Scotland (Not Reported) Volume VIII B - I in the Advocates Library.
[48] While acquiescence may indeed be capable of barring action in the case of future wrongs, it will have that effect only in those rare cases where it can be inferred that the pursuer intended to consent not only to wrongs which had occurred without objection, but also to all similar wrongs, whenever they might occur. In other words, he had given his irrevocable consent. Gloag on Contract (second edition), p. 169 puts the matter in this way:
"Assuming a case where the party whose rights are encroached upon is aware of what is being done, and has a right to interfere if he pleases, his non-interference is probably enough to infer his consent so as to bar him from founding upon it as a wrong for which he is entitled to damages. But it is only in very exceptional cases that mere non-interference can have any further effect, and involve what practically amounts to an agreement to allow an encroachment to continue. Such cases are presented when a party, in building, encroaches to a negligible extent on the property of his neighbour, or on his neighbour's air-space."
Having quoted the passage about an encroaching building from the opinion of Lord Justice Clerk Inglis in the Duke of Buccleugh case and having said that the same inference might be drawn from non-interference in the commission of an act which was practically irremediable, Gloag adds:
"Apart from such cases mere non-interference does not amount to more than tolerance, from which no licence for the future can fairly be inferred."
For my part, I can find nothing in the facts of the present case that would justify the inference that the pursuers had consented irrevocably to the defenders' passing off of their products as the pursuers' in the future. There is no need to consider the position in relation to passing off in the past. For the future at least, the pursuers are certainly not volentes so far as any iniuria in the form of passing off may be concerned. Putting the matter in another way, there is nothing which indicates that they intended to grant an irrevocable consent or licence to passing off by the defenders. There is, accordingly, nothing which bars them from insisting in their conclusions for interdict. This strand of reasoning confirms my view that the defenders' sixth plea-in-law should be repelled.
[49] I should add that the defenders' plea of acquiescence is based on an inference which they seek to draw from the pursuers' silence or failure to object. Inferences of that kind are legitimate only where the party concerned is under a legal duty to speak or object. See, for instance, British Linen Bank Co. v. Cowan. I can find no relationship between the pursuers and the defenders in this case which would have given rise to such a duty. For this reason, as well as the others which I have expressed, at somewhat greater length, I am satisfied that the defenders' first ground of appeal is without merit.
[50] The present case relates to passing off - a delict which corresponds to the tort of passing off in English law. As the facts of the present case illustrate, moreover, passing off may arise out of activities occurring in different parts of the United Kingdom and, indeed, far beyond. It would, therefore, be unfortunate if the result which I have reached on the basis of the Scottish authorities were out of line with the result that would be reached, on similar facts, by the English courts. Happily, in the light of the authorities to which we were referred, I see no reason to believe that there would be any significant difference.
[51] Given the conclusion which I have already reached, it is unnecessary to review the English authorities in any detail. At the one extreme lay Habib Bank Limited v. Habib Bank A. G. Zurich [1981] 1 W.L.R. 1265 where the Court of Appeal held that, even if the defendants had passed off their business as the plaintiffs', the plaintiffs would not have been entitled to an injunction because of the plaintiffs' acquiescence or laches. The plaintiffs had handled the arrangements for obtaining the necessary consents for the defendants to open a branch of their bank in London in 1973 and the plaintiffs' employees had helped to staff the branch from time to time. Moreover, the plaintiffs and defendants had entered into various agency arrangements between 1974 and 1977. It was only in September 1977 that the plaintiffs raised their action of injunction. In those circumstances the Court of Appeal's decision that they were estopped from pursuing their claim was, as it respectfully seems to me, inevitable. It, equally clearly, provides no basis for saying that the pursuers' claim is barred in this case.
[52] The decision of the Court of Appeal in Electrolux Ltd. v. Electrix Ltd. (1953) 71 R.P.C. 23 concerned an action for infringement of the plaintiffs' trade mark, "Electrux". The plaintiffs manufactured "suction" cleaners. Although they had registered the Electrux trade mark in 1928, they did not use it until the end of March 1947 when they applied it to a cheaper model of cleaner in order to give life and utility to the mark, with a view to proceedings against the defendants. In the meantime, from at least 1936 onwards, the defendants had been selling suction cleaners under the name "Electrix". The plaintiffs had been aware of this. During the Second World War, neither party had been able to manufacture cleaners and business could be restarted only when peace was restored in 1945. In June 1947 the plaintiffs' solicitors wrote to the defendants requiring them to stop manufacturing and selling cleaners under the name "Electrix". The plaintiffs eventually raised their action in January 1949. The Court of Appeal rejected the defendants' plea of acquiescence, even though Sir Raymond Evershed M.R. confessed that he felt "no little sympathy" for the defendants who had built up, he did not doubt, a valuable goodwill associated with the name "Electrix" (71 R.P.C. at p. 32). It is particularly significant that, despite his sympathy for the defendants, the Master of the Rolls felt obliged to repel their plea. He did so because he considered that to uphold it would have been to introduce a wholly novel, indeed revolutionary, doctrine. Mere delay, without more, could not be a bar to the plaintiffs' exercise of their rights (71 R.P.C. at p. 34).
[53] The Master of the Rolls dealt with two matters which find some echo in the defenders' arguments in the present case.
[54] First, counsel for the defenders founded on the defenders' actings in building up their business in the years before the pursuers eventually started proceedings in 1992. The suggestion was that, if the pursuers were able to interdict the defenders from continuing to market their products under the name Grant's, they would in effect be depriving the defenders of the fruits of their efforts. In Electrolux Sir Raymond Evershed said (71 R.P.C. at p. 34):
"In a case such as the present, there is no doubt that the Defendant is damaged, he suffers loss, if, after building up this goodwill, he is then restrained from continuing to operate under the name. But it is surely quite wrong to say that the Plaintiff in this case, the owner of the mark, assumes to himself some proprietary right or some benefit which otherwise would be the property of the Defendants. After all, if the Plaintiffs are entitled to succeed, they are only taking and retaining what would be theirs by virtue of their own registered mark - unless, of course, they are prevented by this acquiescence from claiming to assert those rights"
This approach was adopted by Mummery L.J. in his opinion in the Farmers Build case which I quote in paragraph 56 below and by Pumfrey J. in paragraph 112 of his judgment in DaimlerChrysler A.G. v. Alavi, 26 January 2001 unreported. Mutatis mutandis the same applies in the present case. Admittedly, if they are interdicted the defenders will suffer some loss as a result of not being able to use the name Grant's. But, by requiring them to desist, the pursuers do nothing more than vindicate their own right to enjoy the goodwill in the name Grant's, to developing which they have devoted both time and money. The pursuers prevent the defenders from continuing to commit a wrong; they do not deprive the defenders of anything to which they have a legitimate right.
[55] Secondly, a striking feature of the facts found by the Lord Ordinary was the commercial relations which existed for some time between the pursuers and the defenders. The pursuers entered into various contracts with the defenders in terms of which the defenders undertook bottling for the pursuers. On the other hand, the pursuers provided spirit to the defenders. Counsel for the defenders argued that, since these arrangements were entered into at a time when the pursuers were aware of the defenders' use of the name Grant's, they were a factor which, taken along with others, pointed to the conclusion that the pursuers were indeed content for the defenders to market their products under the name Grant's. Similarly, in the Electrolux case, in about November 1940 - at a time when the plaintiffs were well aware of the defendants' use of the name "Electrix" - the plaintiffs contracted with the respondents for the manufacture of 2,500 vacuum cleaners. The Master of the Rolls held (71 R.P.C. at p. 35) that it was impossible to regard that transaction as constituting a representation that would add anything to the general complaint. Similarly, I do not consider that the various contracts between the parties in this case add anything of significance to the other factors on which the defenders rely to establish the plea of acquiescence. Quite simply, the fact that the pursuers were prepared to enter into arm's length transactions with the defenders did not involve a representation that they were consenting to the defenders' use of the name Grant's.
[56] Perhaps the most helpful of the English authorities, however, is Farmers Build Ltd. The appellant owned the intellectual property rights in a slurry separator which the respondents had designed for him in 1991. The relationship between the parties ended in 1992 and the respondents began to manufacture and market a separator which looked different on the outside but was actually the same as the appellant's on the inside. The appellant found out what they were doing in 1993 but, rather than take immediate action, he decided to wait and see how the respondents' version fared on the market. Moreover, the appellant continued to trade with the respondents. In April 1994 the appellant's liquidator wrote to the respondents suggesting that their machine might be infringing the appellant's rights, but the appellant did not send a letter before action until January 1996. The action was raised on 1 February 1996. The respondents argued that the appellant was barred by acquiescence from insisting in the proceedings. Rattee J. dismissed the action, holding that, although the appellant's rights had been infringed, it would be unconscionable to make the respondents disgorge the profit and lose the benefit of the business built up by them in the reasonable expectation, encouraged by the appellant, that the appellant had abandoned any intention to pursue the claim against them. In the Court of Appeal counsel for the respondents conceded that mere knowledge of the respondents' actings and failure to take action to prevent the infringement were not enough to set up the plea of acquiescence and relied, in addition, on the appellant's continuing to trade with the respondents after he found out about their activities in 1993. The Court of Appeal allowed the appeal against what Mummery L.J. described as "this surprising decision" of the trial judge.
[57] Mummery L.J. observed ([1999] R.P.C. at p. 487):
"The position is that Farmers Build brought their proceedings for infringement within the limitation period. The pleaded case and the evidence did not establish any reliance by Carier on any representation or conduct of Farmers Build inducing a reasonable belief in Carier that the design rights did not exist or would not be enforced, so as to prevent Farmers Build from enforcing their legal rights within the limitation period. The effect of the judgment was that delay in bringing the proceedings meant that a claim was as good as statute barred, even before the expiration of the limitation period.
There was no evidence to support the judge's conclusion that Farmers Build had in any way encouraged Carier to continue to put time and money into developing their business in the belief that Farmers Build had decided not to pursue a claim for infringement of that design right. There was no evidence that Farmers Build had lulled Carier into a false sense of security or into thinking that Farmers Build had abandoned any intention to pursue a claim against them.
The true position on the evidence was that Carier knew or ought to have known after the determination of the agreement of June 1, 1992 that they did not own any of the designs of the TARGET machine and that any machine made by them including the design might infringe the rights of Farmers Build. Farmers Build had twice intimated to Carier their belief that Carier were infringing their unregistered design right, but Farmers Build had not created any expectation that Carier would not be sued and Carier had not relied on any expectation. There was no evidence that Carier relied on Farmers Build's failure to sue in 1993 or after the visit of the liquidator in May 1994. There was no ground on which any conclusion could be reached that Farmers Build were estopped from pursuing their legal remedies for compensation.
As a matter of law the judge was wrong to hold that standing by and taking no steps to pursue a claim for infringement of unregistered design made it unconscionable for Farmers Build to claim an account of profits or an inquiry as to damages: see Electrolux Ltd. v. Electrix Ltd. (1953) 71 R.P.C. 23 at 34.
Mr. Watson Q.C. recognised the difficulties in upholding the decision on this point. He accepted that mere delay in starting proceedings after gaining knowledge of infringement was insufficient in law to disentitle a plaintiff, whose intellectual property rights were infringed, from seeking to recover compensation in the form of damages or an account of profits. He accepted that it is not inequitable for a plaintiff simply to stand by. He is entitled to do so without prejudicing his legal right to bring proceedings for compensation before the expiration of the limitation period."
I find powerful support in the reasoning of Mummery L.J. for the decision which I have reached in the present case. Essentially, what the pursuers did was to stand by and wait to see how things developed, just as Farmers Build did. In my view, they were entitled to do so. As I have already noted, the defenders did not put the time and money into developing their business by marketing their products under the name Grant's in reliance on a belief that the pursuers would not pursue a claim for passing off, but because they believed that they were entitled to use that name. While, therefore, the defenders may suffer some loss if they require to change their present marketing arrangements, that is simply a result of their conscious decision to conduct their business in a manner which, they now accept, infringed the pursuers' rights. What the pursuers have been granted in these proceedings is not damages for loss which they may have suffered as a result of the defenders' passing off but an interdict against the defenders from continuing to pass off their products as the pursuers'. No question of prescription arises under the Prescription Act and we should not "rear up" a new common law prescription to cut off the pursuers' right of action. In all the circumstances, despite their delay in coming to court, the pursuers are not barred by acquiescence from insisting in the present action. In my opinion, therefore, the defenders' first ground of appeal should be rejected.
[58] The Pursuers' Right to Interdict
In their second ground of appeal, counsel for the defenders maintained that, even if the Lord Ordinary had been correct to repel their sixth plea-in-law, relating to acquiescence, he had none the less erred in failing to exercise his discretion to refuse the pursuers the remedy of interdict which they sought. Having decided that the defenders were passing off their products as the pursuers' and intended to continue doing so, the Lord Ordinary should none the less have held that interdict was not the appropriate remedy and that, if the pursuers were liable to suffer loss as a result of the defenders' actings, damages would be the appropriate form of redress.
[59] In considering this submission I begin by noting that the Lord Ordinary had difficulty in ascertaining how much actual damage the defenders' passing off had caused to the pursuers. In part, at least, this may have been due to the manner in which the proof was conducted where the pursuers were not claiming damages and so quantification of loss was not a key issue. But, more generally, it is symptomatic of a difficulty which the owner of goodwill may often have in demonstrating exactly what the effect of the infringement of that goodwill may be. That the infringement will, sooner or later, cause damage of a greater or lesser amount may readily be inferred, of course. And, for that reason, the court will readily grant the remedy of interim interdict where a pursuer acts promptly and can set forth a prima facie case of passing off. While, as I have held, the pursuers in this case were entitled to stand back and see how matters developed, the commercial prudence of the pursuers' choosing not to intervene speedily to prevent any possible degradation of their goodwill in the name Grant's must be, at the very least, open to question. Mr. Hodge, Q.C., accepted this. Moreover, the defenders' earlier submission, that they did not have sufficient material even to start proceedings before 1992, flew in the face of all experience of passing off actions in this court and was, in my view, frankly incredible. From a legal point of view, the pursuers' leisurely approach had the significant drawback that, having delayed so long in raising proceedings, they were not in a position to obtain an interim interdict. Not surprisingly therefore, although they had the necessary conclusions in their summons, the pursuers never moved the court to grant interim interdict. The result was that the defenders were able to continue using the name Grant's throughout the long years of the proceedings, including the proceedings in the Inner House. The defenders' business continued to prosper and indeed to grow in prosperity, with the consequential risk of increased damage to the pursuers' brand.
[60] In my view the difficulty of quantifying the damage which the pursuers may suffer as a result of the defenders' passing off is in itself a powerful reason for saying that damages are not the most appropriate remedy in a case like this. It is an equally powerful indicator that the remedy of choice is interdict, to stop the defenders from doing that which, they accept, they have no right to do. By stopping the passing off, interdict makes sure that the pursuers suffer no further damage and all the difficult issues of quantification of loss fall away. I approach the defenders' submission that the Lord Ordinary erred in his exercise of discretion with these considerations firmly in mind.
[61] That the court has a discretion to refuse final decree of interdict is not in doubt. The authorities are well-known and, despite the full submissions presented to us, I find it unnecessary to prolong this opinion by examining them in detail. So far as interdict is concerned, it may be sufficient to refer to the remarks of Lord President Cooper in Ben Nevis Distillery (Fort William) Ltd. v. North British Aluminium Co. Ltd. 1948 S. C. 592 at p. 598. The best-known statement of the general position is contained in the speech of Lord Watson in Grahame v. Magistrates of Kirkcaldy (1882) 9 R (HL) 91 where he said (at pp. 91 - 92):
"It appears to me that a superior Court, having equitable jurisdiction, must also have a discretion, in certain exceptional cases, to withhold from parties applying for it that remedy to which, in ordinary circumstances, they would be entitled as a matter of course. In order to justify the exercise of such a discretionary power there must be some very cogent reason for depriving litigants of the ordinary means of enforcing their legal rights. There are, so far as I know, only three decided cases, in which the Court of Session, there being no facts sufficient to raise a plea in bar of the action, have nevertheless denied to the pursuer the remedy to which, in strict law, he was entitled. These authorities seem to establish, if that were necessary, the proposition that the Court has the power of declining, upon equitable grounds, to enforce an admittedly legal right; but they also shew that the power has been very rarely exercised."
For my own part, I do not attach any significance to the fact that the discretion to refuse the remedy to which the pursuer was entitled in strict law has been exercised only very rarely. A court will be called upon to exercise that discretion wherever the circumstances make it appropriate to do so, irrespective of whether such circumstances occur frequently or infrequently.
[62] Mr. Jones submitted that, in considering whether to exercise the discretion to withhold the remedy of interdict, the court had to balance the interests of the pursuers and the interests of the defenders. The cases where the court had been reluctant to refuse interdict involved, for the most part, pursuers who were infeft proprietors of heritable property complaining of the infringement of the rights flowing from their title. Such rights were well recognised and so, in balancing the parties' interests, the court began from a position where the public interest indeed favoured giving effect to the pursuers' property rights. Where that element was absent, as in School Board of the Parish of Kelso v. Hunter (1874) 2 R 228, the court could adopt a freer approach. In that case Lord Deas had expressly recognised that interdict was only ever granted "in the exercise of a sound judicial discretion" (2 R. at p. 232). Without entering into a detailed examination of the case, I would merely observe that Lord Deas said what he did in the particular procedural context of an application to the Judge Ordinary of the bounds where debatable rights were not to be determined nor new or undecided questions resolved. The present case, where the pursuers' rights have been determined after a long proof, is completely different and I am satisfied that the Kelso School Board case provides no real guidance. In these circumstances also I see no reason in principle why the court should adopt a different approach from the one that it would adopt if asked to grant interdict in order to vindicate some other established right of a pursuer, such as a right in heritable property.
[63] Mr. Jones submitted that, in deciding whether to withhold the remedy of interdict, the court should take into account the delay and other factors which it had required to consider when deciding whether the pursuers' action was barred by reason of acquiescence. Even if the court had repelled that plea, those factors could still constitute a basis for withholding this particular remedy. It would, however, in my view be surprising, as Mr. Hodge submitted, if, in a case where the most effective remedy against the continuing wrong of passing off would be interdict, the court should exercise its discretion to withhold that remedy on the basis of factors which it had judged insufficient to bar the action. I find support for this approach in the opinion of Goff L.J. in H. P. Bulmer Ltd. and Showerings Ltd. v. J. Bollinger S. A. [1978] R.P.C. 79 at pp. 135 - 136 where he held, obiter, that the case for refusing the equitable remedy of injunction would need to approximate to what would actually have destroyed the right by estoppel. Here, having considered all the various factors which were of relevance to the question of acquiescence, I do not find in them an adequate reason for refusing the pursuers the remedy of interdict which they seek and which is, in my view, best suited to deal with the situation.
[64] Counsel for the defenders sought in particular to argue that the interdict would cause actual loss and damage to the defenders whereas any loss or damage to the pursuers was somewhat speculative. I have already dealt with the matter of the pursuers' loss: however difficult to quantify the loss may be, the pursuers' goodwill is damaged by the defenders' actings and the damage is likely to increase, the longer the defenders continue marketing their products under the name Grant's and the more successful they are in doing so. On the other hand, it is well established that, in a question of final interdict, the question of loss which the defender may suffer is irrelevant. See, for instance, Burn-Murdoch on Interdict, p. 102 and Clippens Oil Co. Ltd. v. Edinburgh and District Water Trs. (1897) 25 R. 370 at p. 382 per Lord Adam. The reason why that should be so is obvious in a case like the present: the defenders' contention was, in essence, that the court should not require them to suffer the loss and inconvenience which would flow from having to stop committing a legal wrong against the pursuers. That is an untenable submission and is, at best, only another version of the argument which I have already rejected in paragraph 54 under reference, in particular, to the opinion of the Master of the Rolls in the Electrolux case. In any event, it should be remembered that the pursuers do not seek to interdict the defenders from producing and marketing their gin and vodka; all that they seek is an interdict against the defenders doing so under the name Grant's. In addition, counsel for the pursuers expressly said that they would be content for any interdict to come into force only after three months, in order to give the defenders an opportunity to make the necessary changes in their business operations. Counsel for the defenders did not comment on this offer and, in particular, did not suggest that three months would not be sufficient to make the necessary changes. I would add this. In some cases a change of name might indeed be wholly destructive of a defender's business, but I see no reason to believe that this is likely to be so in this case where, as counsel for the defenders stressed, the defenders have built up their business, to a considerable extent at least, by marketing their products at a highly competitive price. There is no reason why they should not continue that strategy in the future.
[65] For all these reasons I am satisfied that the Lord Ordinary was correct not to withhold the remedy of interdict.
[66] Territorial Effect of the Interdict
We listened to an interesting argument in support of the defenders' fourth ground of appeal, that the Lord Ordinary had erred in holding that interdict should apply in respect of export of the defenders' products bearing the name Grant's to all countries, since the evidence did not warrant a view that exports to all overseas markets were unlawful. In dealing with the matter, I proceed on the basis that the Lord Ordinary's findings are more than ample to demonstrate that the defenders are liable to pass off their products as the pursuers' in many overseas markets and that consumers and others in those markets are likely to experience confusion as a result. I can state fairly succinctly why I am satisfied that we should reject this ground of appeal also.
[67] In the first place, the interdict granted by the Lord Ordinary is in a form which was sanctioned by the House of Lords in Johnston v. Orr-Ewing (1882) 7 App. Cas. 219 and, as Lord Clarke pointed out, it was recognised as appropriate in the Court of Session as long ago as Price's Patent Candle Co. v. Ogston and Tennant (1909) 26 R.P.C. 797 at pp. 814 - 815. More recently, in John Walker & Sons Ltd. v. Douglas McGibbon & Co. 1972 S.L.T. 128 Lord Avonside considered the point and decided that it was proper to grant such an interdict. Interdicts and injunctions in these terms have indeed been granted in countless cases over more than a century. See, for instance, Wadlow, The Law of Passing Off (second edition), paragraph 4.49. In these circumstances only the most cogent reasons would justify us in holding that this form of interdict was inappropriate. I can detect no such cogent reasons. Indeed, as a practical solution, the advantages of this form of interdict are obvious since a single interdict against exporting avoids the need for the person, whose goodwill is being affected, to raise separate proceedings in many different countries, with an inevitable increase in cost and inconvenience.
[68] That said, there might be force in the defenders' argument if the basis of the interdict against exporting were that the defenders were passing off their goods in the overseas territory, where such a delict might not be recognised. But that is not so. Rather, interdict is granted on the basis that the wrong is committed and liability for passing off is complete, at the latest, when the defender exports from the United Kingdom goods which will deceive in the foreign market. That being so, Scottish law applies and there is no need to consider whether a wrong would be committed under the law of the foreign market. Cf. Wadlow, The Law of Passing Off, paragraph 4.49.
[69] The theoretical basis of this aspect of the law of passing off is to be found, for instance, in the opinion of James L.J. in Singer v. Loog (1880) 18 Ch D 395 where he said (at pp. 412 - 413):
"[N]o man is entitled to represent his goods as being the goods of another man; and no man is permitted to use any mark, sign or symbol, device or other means, whereby, without making a direct false representation himself to a purchaser who purchases from him, he enables such purchaser to tell a lie, or to make a false representation to somebody else who is the ultimate customer.... [H]e must not, as I said, make directly, or through the medium of another person, a false representation that his goods are the goods of another person."
See also the discussion by Foster J. in John Walker & Sons Ltd. v. Henry Ost & Co. Ltd. [1970] 1 W.L.R. 917 at pp. 930 F - 933 E. As Mr. Wadlow remarks in the passage to which I have referred, this doctrine does not lie on the margins of the law of passing off but really constitutes the basis upon which many manufacturers and wholesalers, as opposed to retailers, are held liable. In this case it falls to be applied to the defenders since, when they export their goods carrying the name Grant's, they are aware, even if only on the basis of the Lord Ordinary's findings, that traders in overseas markets either may be deceived themselves as to whether the products are the pursuers' or else may supply the products to consumers who are liable to be deceived. The defenders' products, carrying the name Grant's on the label, are instruments of fraud or deception. In these circumstances, the defenders commit the delict of passing off when they export their products with that label. The pursuers are accordingly entitled to interdict in the terms sought. See, for instance, Price's Patent Candle Co. 26 R.P.C. at p. 814 per Lord Johnston: in that case the name and labelling of the candles were likely to deceive the public in the Moroccan market. In my view Lord Abernethy reached the correct view on this point (1995 S.L.T. at pp. 943 D - 944 G) - and I note that, in the Supplement to paragraph 4.49 of his textbook, Mr. Wadlow refers to his decision and apparently regards it as being consistent with the established law.
[70] Exports to Member States of the European Union
The defenders further contended that, even if the defenders were entitled to an interdict which would prevent them exporting to other parts of the world, the Lord Ordinary had erred in holding that the remedy of interdict was justified or proportionate in so far as it affected trade with Member States of the European Union. In advancing this proposition the defenders were renewing a submission which they had made in the Outer House at a late stage, when the Lord Ordinary had issued his principal opinion, had pronounced an interlocutor repelling the defenders' pleas-in-law and was being addressed at a By Order hearing on the appropriate form of order to pronounce. Although the Lord Ordinary dealt with the defenders' submission on its merits, he also expressed the view that it came too late, particularly since part of the argument was to the effect that the pursuers should have led evidence to prove that a remedy against passing off of this kind would have been available in all the other jurisdictions in the Community. In my view, for the reasons which he gives, the Lord Ordinary would have been entitled to reject the defenders' submission on the basis that it came too late and that, because it had not been focused in the pleadings, the pursuers would have been liable to suffer prejudice from not having a proper opportunity to counter it by leading evidence, if appropriate. In these respects this case differs from Caledonia North Sea Ltd. v. London Bridge Engineering Ltd. 2000 S.L.T. 1123.
[71] The defenders' submission bore to be based on Article 29 (ex Article 34) EC:
"Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States."
Mr. Robertson argued that an interdict in the terms granted by the Lord Ordinary was not neutral in effect, since it applied the same result to situations which were unlike, because, even if the exports of the defenders' products might infringe rights of the pursuers recognised in certain Member States, in other States the pursuers might have no such rights that could be infringed. The Lord Ordinary rejected the same argument when it was advanced before him by Mr. Davidson, Q.C., who then represented the defenders. In my view the Lord Ordinary was correct to reject the argument: for the reasons which he gives, it is wholly untenable. In deference to the submissions of Mr. Robertson and Miss Dunlop, however, I deal with the matter, albeit relatively briefly.
[72] The starting point is that the interdict applies equally to the marketing of the defenders' products with the name Grant's within the United Kingdom and to the exporting of those products with that name for sale in other Member States. Article 29 is not concerned with that kind of situation, as the Court of Justice explained in P. B. Groenveld B. V. v. Produktschap voor Vee en Vlees Case 251/78 [1979] E.C.R. 3409. The case concerned a Dutch regulation which prohibited any manufacturer of sausages from having in stock or processing horsemeat. A wholesaler of horsemeat, who wished to begin manufacturing sausages from horsemeat, raised the question of whether the prohibition was compatible with what was then Article 34 (now Article 29). The Court described the problem in this way (at paragraph 3):
"The order for reference, in particular Point 7, shows that the regulation in question was adopted for the purpose of protecting Netherlands exports of meat products both to Member States and to non-member countries which constitute important export markets and where there are objections to the consumption of horsemeat or indeed where the importation of products containing horsemeat is prohibited. As it is practically impossible to determine the presence of horsemeat in meat products the sole means of ensuring that such products do not contain horsemeat is to prohibit manufacturers of meat products from having in stock, preparing or processing horsemeat.... Article 3(1) of the above-mentioned regulation applies solely to the industrial manufacture of meat products but not to the stocking or retail sale of horsemeat by butchers. The file further establishes that the regulation in question does not affect imports or re-exports of horsemeat originating in other Member States or non-member countries."
The Court held (at paragraph 7) that Article 34 did not apply to this measure:
"The provision concerns national measures which have as their specific object or effect the restriction of patterns of exports and thereby the establishment of a difference in treatment between the domestic trade of a Member State and its export trade in such a way as to provide a particular advantage for national production or for the domestic market of the State in question at the expense of the production or of the trade of other Member States. This is not so in the case of a prohibition like that in question which is applied objectively to the production of goods of a certain kind without drawing a distinction depending on whether such goods are intended for the national market or for export."
See also Summary Proceedings against Sergius Oebel Case 155/80 [1981] E.C.R. 1993 at paragraphs 15 and 16. On the basis of the law as laid down by the European Court, the interdict in the present case does not infringe Article 29, even if it happens to operate differently in other Member States of the Community: the important point is that it is not designed to provide a particular advantage for the pursuers' production and sales in this country at the expense of the production or trade of entities in other Member States.
[73] In any event, by reason of Article 30 (ex Article 36) EC, Article 29 does not preclude prohibitions or restrictions on exports which are justified on grounds of the protection of industrial and commercial property, provided they do not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. The interdict in this case is designed to protect the pursuers' commercial goodwill and is therefore excluded from the ambit of Article 29, provided that it is not caught as being a means of arbitrary discrimination or a disguised restriction on trade between Member States.
[74] In this connexion the European Court has recognised that, in the present state of Community law, different Member States regulate certain matters of commercial property differently. Article 30 determines how respect for these commercial property rights is to be reconciled with the requirements of free movement of goods. In Keurkoop B. V. v. Nancy Kean Gifts Case 144/81 [1982] ECR 2853 at paragraph 24 the Court said that the reconciliation
"must be achieved in such a way that protection is ensured for the legitimate exercise, in the form of prohibitions on imports which are 'justified' within the meaning of that article, of the rights conferred by national legislation, but is refused, on the other hand, in respect of any improper exercise of the same rights which is of such a nature as to maintain or establish artificial partitions within the common market. The exercise of industrial and commercial property rights conferred by national legislation must consequently be restricted as far as is necessary for that reconciliation."
In B. V. Industrie Diensten Groep v. J. A. Beele Handelmaatschappij B. V. Case 77/81 [1982] E.C.R. 707 the European Court held (at paragraph 7) that, although the injunction in question constituted an obstacle to the free movement of goods and was therefore caught by what was then Article 30 (now Article 28), obstacles to movement within the Community resulting from disparities between national legislation must be accepted in so far as the legislation, applying without discrimination to both domestic and imported products, might be justified as being necessary in order to satisfy mandatory requirements relating in particular to the protection of consumers and fairness in commercial transactions. The Court went on to hold (at paragraph 9) that:
"National case-law prohibiting the precise imitation of someone else's product which is likely to cause confusion may indeed protect consumers and promote fair trading; these are general interests which, according to the decisions of the Court cited above, may justify the existence of obstacles to movement within the Community resulting from disparities between national laws relating to the marketing of products."
This makes it clear that, in the absence of common Community rules on marketing of products, national laws prohibiting the imitation of another's product which is likely to cause confusion may be given effect in order to protect consumers and promote fair trading, even where the national laws are stricter than the rules in other Member States and even where they result in obstacles to movement within the Community.
[75] So, for instance, in Deutsche Renault A.G. v. Audi A.G. Case C-317/91 [1993] ECR I-6227 Audi had since 1980 marketed four-wheel drive vehicles on the German market under the trade mark "Quattro". In 1988 Renault introduced on to the German market a four-wheel drive vehicle which was manufactured in France and which had already been marketed in other European countries under the designation "Espace Quadra". Renault applied to the German Patent Office to have the Audi trade marks removed from the register on the ground that a numeral, even in the form of a foreign word, could not be registered. The Office removed the trade marks and the German Patent Court dismissed an action brought to challenge those decisions. On appeal, the Munich Landesgericht referred the matter to the European Court. The Court held (at paragraph 20) that, subject to Article 36 (now Article 30), in the absence of standardisation or harmonisation of laws, the conditions and procedures for the protection of an intellectual property right were a matter for national law. There was nothing to suggest that the German courts would interpret the concept of confusion broadly where the protection of the trade mark of a German producer was at issue, but interpret the same concept strictly where the protection of the trade mark of a producer established in another Member State was concerned. Therefore, laws like the German laws, under which an exclusive right to use a designation such as "Quattro" might be exercised in order to prevent the use of a designation such as "Quadra", which was assumed to be capable of creating a risk of confusion with "Quattro", constituted neither arbitrary discrimination nor a disguised restriction on intra-Community trade. See paragraphs 33 and 34 of the Court's judgment. In the Deutsche Renault case the proceedings arose in the Member State into which the vehicles were being imported. But, other things being equal, the same approach would have been appropriate if, say, Audi had sought an order from the French courts to restrain the export of the vehicles under the designation "Espace Quadra" and even if no remedy had been available under German law.
[76] Similarly, in this case I am satisfied that, as the Lord Ordinary applied the same approach to both domestic and export sales, the interdict which he granted was compatible with Community law since it was designed to protect consumers and to promote fair trade. Moreover, that was so even though the protection which it afforded the pursuers throughout the Community might be greater than the protection which would be available under the domestic laws of particular Member States. For these reasons, which are little more than a restatement of those given by the Lord Ordinary, I am satisfied that the defenders' fifth ground of appeal must also be rejected.
[77] Interdict against the Defenders Passing Off their Business as the Pursuers'
Finally, I turn to the only cross ground of appeal which counsel for the defenders argued. In the event, Mr. Jones did not really oppose it with any vigour.
[78] In presenting this argument, Mr. Hodge drew attention to the fact that, as I have recorded at paragraph 24 above, the Lord Ordinary had found that by using the name Grant's the defenders had been able to take advantage of its distinctiveness when associated with the pursuers' business as well as with their products. The defenders had therefore taken advantage of the pursuers' investment in that name, when used in association with their business. In other words the defenders were in effect passing off their business as the pursuers' and the Lord Ordinary should therefore have granted interdict in terms of the first conclusion. For his part, Mr. Jones did not dispute that the Lord Ordinary had been entitled to make this finding in fact, nor that there was evidence that certain witnesses had been misled into thinking that the defenders' business was the pursuers'. But, he contended, that was not in itself a reason why the Lord Ordinary had been bound to grant interdict in terms of the first conclusion. He was entitled to take the view that interdict in terms of the second conclusion would afford the pursuers all the protection which was necessary.
[79] I consider that the submissions on behalf of the pursuers are to be preferred. The starting point is the statement of Warrington L.J., as he then was, in Ewing v. Buttercup Margarine Company Ltd. [1917] 2 Ch. 1 at p. 13 where he said that the plaintiff
"has proved that the defendants have adopted such a name as may lead people who have dealings with the plaintiff to believe that the defendants' business is a branch of or associated with the plaintiff's business. To induce the belief that my business is a branch of another man's business may do that other man damage in various ways. The quality of goods I sell, the kind of business I do, the credit or otherwise which I enjoy are all things which may injure the other man who is assumed wrongly to be associated with me."
Here, by parity of reasoning, the pursuers may suffer damage in a variety of ways if customers or suppliers are misled into thinking that the defenders' business is associated with the pursuers'. That may be particularly the case where, as here, the pursuers aim to project a particular image of their business which is very different from that of the defenders' business. In that situation the goodwill attaching to the pursuers' business is likely to be damaged. Since the Lord Ordinary has accepted that confusion has occurred, I consider that it would have been appropriate for him to grant interdict in terms of the first conclusion.
[80] Result
For these reasons I would move your Lordships to refuse the defenders' reclaiming motion and to allow the pursuers' cross-appeal to the extent of sustaining their second plea-in-law and granting interdict in terms of the first conclusion. To give effect to the pursuers' very proper view that the defenders should be given time to make the necessary changes to their business, I would also move your Lordships to supersede extract of the decree for a period of three months.
FIRST DIVISION, INNER HOUSE, COURT OF SESSION
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Lord President Lord Nimmo Smith Lord Clarke
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088/16/92 OPINION OF THE HONOURABLE LORD NIMMO SMITH in RECLAIMING MOTION in the cause WILLIAM GRANT & SONS LIMITED and OTHERS Pursuers and Respondents; against GLEN CATRINE BONDED WAREHOUSE LIMITED and OTHERS Defenders and Reclaimers: _______ |
Act: Hodge, Q.C., Dunlop and Cormack; McGrigor Donald
Alt: Jones, Q.C., Robertson; McClure Naismith
16 May 2001
[1] I am in entire agreement with your Lordship in the chair that the defenders' reclaiming motion should be refused, that the pursuers' cross-appeal should be allowed to the extent of sustaining their second plea-in-law and granting interdict in terms of the first conclusion, and that extract of the decree should be superseded for a period of three months, all for the reasons given by your Lordship. These are so fully set out that there is little that I can usefully add. Your Lordship has drawn together the Lord Ordinary's findings-in-fact in a summary on which I now proceed.
Acquiescence
[2] The defenders do not seek to challenge in this reclaiming motion the Lord Ordinary's finding that they have passed off their gin and vodka as the pursuers'. It is, however, important to bear in mind what this finding amounts to. Passing off has been defined in similar terms in a number of leading cases. For present purposes I shall confine myself to quoting from the speech of Lord Oliver in Reckitt & Colman Products Limited v. Borden Inc. [1990] 1 WLR 491, at p. 499:
"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 specifically 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 on 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."
Later in his speech, at p. 508, Lord Oliver said that the "essence of the action for passing off is a deceit practised upon the public." In effect, therefore, by arguing that the pursuers have acquiesced in the defenders' use of the name Grant's in relation to their gin and vodka and are thus personally barred from pursuing the remedy of interdict to prevent them from continuing to pass off their products as the pursuers' in the future, the defenders are claiming that the pursuers cannot prevent them from continuing in perpetuity to practise a deceit on the public. It is with this in mind that the concept of acquiescence must be considered.
[3] The extensive review of the authorities with which we were favoured satisfies me that the principle which is applicable in circumstances such as the present is to be found in Cairncross v. Lorimer (1860) 3 Macq. 827 and Gatty v. Maclaine 1921 S.C. (H.L.) 1. In Cairncross v. Lorimer Lord Campbell L.C. said, at p. 829:
"[I]f a man, either by words or by conduct, has intimated that he consents to an act which has been done, and that he will offer no opposition to it, although it could not have been lawfully done without his consent, and he thereby induces others to do that from which they otherwise might have abstained, - he cannot question the legality of the act he had so sanctioned, - to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct."
At p. 830 he said:
"I am of opinion that, generally speaking, if a party having an interest to prevent an act being done, has full notice of its having been done, and acquiesces in it, so as to induce a reasonable belief that he consents to it, and the position of others is altered by their giving credit to his sincerity, he has no more right to challenge the act to their prejudice, than he would have had if it had been done by his previous licence."
In Gatty v. Maclaine Lord Birkenhead L.C. said, at p. 7:
"[T]he rule of estoppel or bar, as I have always understood it, is capable of extremely simple statement. Where A has by his words or conduct justified B in believing that a certain state of facts exists, and B has acted upon such belief to his prejudice, A is not permitted to affirm against B that a different state of facts existed at the same time."
Acquiescence is of course one form of personal bar.
[4] It appears to me to be entirely clear from these and other authorities that in order for a defender to succeed in a plea of acquiescence he must be able to establish a causal relationship between the pursuer's failure to act and his own actings; that he would not have acted as he did if the pursuer had not induced a reasonable belief that he consented to his doing so. In the present case the defenders' plea of acquiescence must fail because proof of this essential feature is lacking; indeed they never offered to prove it. Their position, as their counsel put at the forefront of their argument, was that they used the name Grant's in the mistaken belief that, because it was a name to which they could lay claim historically, it was one which they were entitled to use. Their submission was that acquiescence can be made out where the actings of the alleged wrongdoer are based on his own mistaken belief that he was acting within his own rights, rather than on a belief that the party who subsequently asserted the contrary right consented to his doing so. This proposition flies in the face of what are in my view the binding authorities and falls to be rejected.
[5] There is a further ground on which, in my opinion, the plea of acquiescence cannot succeed. In Earl of Kintore v. Pirie & Sons Limited (1903) 5 F. 818, the Lord Ordinary, Lord Kyllachy said, at p. 839:
"Acquiescence may bar objection to what is past, - to what has been done. But it can never, so far as I know, establish directly or indirectly a continuing and perpetual right. I may have allowed my neighbour, it may be for years, to draw and to use, say my share as well as his own of a certain stream or other water supply; but I may resume my own share at pleasure...The truth is that, to serve the defenders' purpose what they call acquiescence would require to be something of the nature of an agreement."
While not all the authorities to which we were referred can be reconciled, partly no doubt because the nature of the infringement of rights in heritable property gives rise to special considerations, this dictum appears to me to be a correct statement of the limits of the doctrine of acquiescence in a case, such as the present, of infringement of rights in incorporeal moveable property. The course of conduct in which the defenders have engaged in passing off their products as the pursuers' is truly a series of numerous individual acts, the continuity of which can be broken at any time. Even if the pursuers had acquiesced in the defenders' conduct prior to the raising of the action, I can see no reason why it should follow that they should be held to have acquiesced in the defenders' future conduct thereafter. It is one thing that a pursuer should be barred by acquiescence from claiming a remedy in respect of conduct which by inaction he has failed to prevent; but it is quite another that he should be held to have acquiesced in future conduct even when, by raising the action, he has made it abundantly clear that he does not consent to it. If the latter were the case, the pursuer would in effect be held to have agreed to a transaction to which it can hardly be supposed he would voluntarily have given consent.
The pursuers' right to interdict
[6] I agree, for the reasons given by your Lordship in the chair, that the Lord Ordinary was correct not to exercise the power of the court to decline, upon equitable grounds, to grant the remedy of interdict. As Lord Watson put it in Grahame v. Magistrates of Kirkcaldy (1882) 9 R (HL) 91 at pp. 91-92, there must be some very cogent reason to justify the exercise of such a discretionary power. No such cogent reason exists in the present case. Indeed, it is hard to figure a case in which, a plea of acquiescence having failed, the court would nevertheless decline to grant perpetual interdict.
[7] I wish, however, to take this opportunity to observe that nothing that we have decided about acquiescence and the right to interdict should, in my view, be taken as an encouragement to pursuers to delay in coming to court to obtain remedies for infringement of their intellectual property or other similar rights. In my experience, such rights are jealously protected by their owners, who, in the expression used in evidence in the present case, regard themselves as custodians of their brands. In an application for interim interdict the court requires to consider whether a pursuer has a prima facie case and, if so, whether the balance of convenience favours the granting of interim interdict. In most cases delay on the part of the pursuer in applying for interim interdict is unlikely to tilt the balance in his favour. Moreover, if circumstances are present which would support a plea of acquiescence, the pursuer is at risk of losing at least his entitlement to damages for any loss he may have suffered prior to the raising of the action. It is noteworthy that in the present case the pursuers have not concluded for damages and did not apply for interim interdict. They may not have lost the right to perpetual interdict, but they might have saved themselves much else by raising an action promptly once they became aware of the defenders' passing off.
Territorial effect of the interdict
[8] In Singer v. Loog (1880) 18 Ch D 395 James L.J. said, at pp. 412-413:
"[N]o man is entitled to represent his goods as being the goods of another man; and no man is permitted to use any mark, sign or symbol, device or other means, whereby, without making a direct false representation himself to a purchaser who purchases from him, he enables such purchaser to tell a lie, or to make a false representation to somebody else who is the ultimate consumer."
This form of definition of the delict of passing off looks to the stage at which the infringing product is produced as well as to the stage at which it is sold to the ultimate consumer. It is not difficult to regard it as the making of a false representation by the defenders as soon as they apply the name Grant's to the labelling or packaging of their products with a view to their sale, which is why the Lord Ordinary, correctly in my view, pronounced interdict against the defenders from inter alia labelling and packaging the products in question under that name. Certainly I would regard the delict as being complete when the defenders export their products under that name, thus making them instruments by which purchasers in foreign markets may be deceived. There are sound practical as well as theoretical reasons for granting an interdict in the present form, and there is a line of authority, starting with Johnston v. Orr-Ewing (1882) 7 App. Cas. 219, in which orders in similar terms have been granted.
Exports to Member States of the European Union
[9] In my opinion the submission that an interdict, which had the effect of preventing the defenders from exporting their products to the other Member States of the European Community contravened Article 29 of the Treaty of Amsterdam, would rightly have been rejected by the Lord Ordinary as coming too late. It was not foreshadowed in the pleadings, no evidence was specifically directed to it, and there was clear prejudice to the pursuers in the advancing for the first time after the Lord Ordinary had issued his main opinion of a submission that, as he put it, "had about it a strong smell of the lamp."
[10] In any event, the Lord Ordinary correctly rejected the submission on its merits. Article 29 provides:
"Quantitative restrictions on exports, and all measures having equivalent effect, shall be prohibited between Member States."
In P.B. Groenveld B.V. v. Produktschap voor Vee en Vlees Case 251/78 [1979] E.C.R. 3409 the Court of Justice held, at para. 7, that the then Article 34 concerned national measures which had as their specific object or effect the restriction of patterns of exports and thereby the establishment of a difference in treatment between the domestic trade of a Member State and its export trade, in such a way as to provide a particular advantage for national production or for the domestic market of the State in question at the expense of the production or of the trade of other Member States. The Article did not concern a prohibition which was applied objectively to the production of goods of a certain kind without drawing a distinction depending on whether such goods were intended for the national market or for export. In the present case the interdict, the principal effect of which is the prohibition of the use of the name Grant's on the defenders' products, applies both to products intended for sale in the United Kingdom and to products intended for export. It accordingly does not contravene the provisions of Article 29, as explained by the Court of Justice in relation to its predecessor, Article 34. An interdict which was intended to prevent use of the name Grant's on the defenders' products in the United Kingdom but not in other Member States (even if otherwise practicable) would, in my view, contravene the provisions of Article 29.
[11] In any event, Article 30 (formerly Article 36) provides that Article 29 does not preclude prohibitions or restrictions on exports which are justified on grounds of the protection of industrial and commercial property, provided they do not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. The Court of Justice has recognised that there are disparities between the national laws of the Member States in respect of industrial and commercial property rights. In B.V. Industrie Diensten Groep v. J.A. Beele Handelmaatschappij B.V. Case 77/81 [1982] E.C.R. 7007, the court held (at para. 7) that obstacles to movement within the Community resulting from disparities between national legislation must be accepted so far as the legislation, applying without discrimination to both domestic and imported products, might be justified as being necessary in order to satisfy mandatory requirements relating in particular to the protection of consumers and fairness in commercial transactions. At para. 9 these were described as general interests which may justify the existence of obstacles to movement within the Community resulting from disparities between national laws relating to the marketing of products. This is exactly the position here, where the effect of the interdict is to prevent the defenders from practising a deceit on the public in any Member State, whether or not the national laws of that Member State confer on the pursuers the same protection as is available in the United Kingdom.
FIRST DIVISION, INNER HOUSE, COURT OF SESSION
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Lord President Lord Nimmo Smith Lord Clarke
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088/16/92 OPINION OF LORD CLARKE in RECLAIMING MOTION in the cause WILLIAM GRANT & SONS LIMITED and OTHERS Pursuers and Respondents; against GLEN CATRINE BONDED WAREHOUSE LIMITED and OTHERS Defenders and Reclaimers: _______ |
Act: Hodge, Q.C., Dunlop and Cormack; McGrigor Donald
Alt: Jones, Q.C., Robertson; McClure Naismith
16 May 2001
[1] I agree with your Lordship in the chair that the reclaiming motion should be refused for the reasons fully set out by your Lordship. I also agree that the respondents are entitled to have pronounced in their favour the interdict in the terms they sought at the reclaiming motion hearing, in substitution for that pronounced by the Lord Ordinary and that extract of the decree should be superseded for a period of three months.
[2] In deference to the very full submissions which were made in this case, I would simply wish to add the following observations.
The plea of acquiescence
[3] In relation to a case, like the present, the leading authority on this subject, which remains the law of Scotland, and which is binding on this court, is the case of Cairncross v. Lorimer (1860) 3 Macq. 827 and, in particular, the speech of the Lord Chancellor in that case at pages 829 to 830. There is no doubt, to my mind, that his Lordship was there seeking to set out authoritatively how, and in what circumstances, acquiescence operates to prevent a person from enforcing what otherwise are his rights. His Lordship at page 829 was to the effect that he was concerned with a doctrine which was
"to be found in, I believe, in the laws of all civilised nations, that if a man, either by words or by conduct, has intimated that he consents to an act which has been done, and that he will offer no opposition to it, although it could not have been lawfully done without his consent, and he thereby induces others to do that from which they otherwise might have abstained, - he cannot question the legality of the act he had so sanctioned, - to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct" (my emphasis).
At page 830 his Lordship continued:
"I am of opinion that, generally speaking, if a party having an interest to prevent an act being done, has full notice of its having been done, and acquiesces in it, so as to induce a reasonable belief that he consents to it, and the position of others is altered by their giving credit to his sincerity, he has no more right to challenge the act to their prejudice, than he would have had if it had been done by his previous licence" (my emphasis).
From the words which I have highlighted in those passages it is, in my judgment, an essential element of the doctrine of acquiescence that the party pleading it, in order to prevent an otherwise legal right being enforced against him, or to avoid the consequences of what otherwise would have been a wrong committed by him, can show that (a) the actings, words or inaction, of the person seeking to enforce the right, or seeking a remedy for its infringement, have, as a matter of fact, induced him into a reasonable belief that the right would not be enforced or that no claim would be taken in respect of any infringement thereof and that (b), as a consequence of that inducement, he has in some way altered his position in reliance on that reasonable belief. The essential elements in the paradigm case of acquiescence is conduct, or inaction (sometimes described as standing by), by one person which actually induces another to have a reasonable belief upon which that other person places reliance and proceeds to alter his circumstances.
[4] It was agreed, on both sides of the bar, that acquiescence is but one particular example of the general doctrine of personal bar, which is an equitable doctrine, and which, in my judgment, speaking generally, may come into play where the law considers it inequitable that a man who has represented a state of facts and his representation has induced another both to believe in this state of facts, and to arrange his affairs as a result thereof, should be later allowed to go back on that representation. I accept, as senior counsel for the reclaimers put it, that the equitable basis of all pleas of personal bar is rooted in the notion that a litigant should not be permitted to come to court and deny what he has previously affirmed. But, since the effect of acquiescence may be to obliterate, for practical purposes, what are otherwise perfectly valid and subsisting legal rights, the equities require, in my judgment, that, if a person's rights are to be so obliterated, he has induced, in some way, others to believe that he was no longer interested in enforcing his rights against them and that they have altered their position in reliance on that belief. I prefer in this context to use the expression "altered their position" rather than the words "acted to their prejudice" since, it seems to me, that an analysis of the authorities, which were placed before us, demonstrates that the doctrine may operate, provided reliance has been placed on the representation, even though what may ordinarily be described as prejudice to the party so relying has not occurred.
[5] In the present case the reclaimers argue that the doctrine of acquiescence can operate, even where there has been no induced reliance, and alteration of position, as a consequence thereof, by the person taking the plea. It may be enough, it was submitted, for the plea to operate, that person A, who is aware of actings of another, O, which trespass on his rights, remains silent, and, after some delay, complains that O is infringing those rights, but in the meantime O has changed his circumstances. That approach to matters, as can be seen, strips out any requirement of actual inducement by A and reliance thereon, causing or contributing to O changing his circumstances. I am not persuaded that there is any proper support for that formulation in the previous authorities. Previous cases such as Houldsworth v. Magistrates of Wishaw (1887) 14 R. 920, Cantors Properties (Scotland) Ltd. v. Swears and Wells Ltd. 1978 SC 310 and Cumming v. Quartzag 1980 S.C. 276, on the contrary, appear to have proceeded on the footing that inducement, reliance and consequent change of position were the necessary ingredients of the plea. Counsel for the reclaimers, indeed, acknowledged, for example, that their formulation is inconsistent with the classic statement of the doctrine of personal bar as set out in Gatty v. Maclaine 1921 S.C. (H.L.) 1 per Lord Chancellor (Birkenhead) at p. 7. As senior counsel for the respondents pointed out, had the Lord Chancellor in Cairncross, considered that the components of inducement and reliance were not required he would surely have said so. Instead his speech reiterates these factors as essential requirements for the concept of acquiescence to have legal effects. There can, in my judgment, be no acquiescence "in the air", as it were. For it to operate with legal effects there must be conduct, words or inaction, on the part of one, which can be shown to have had a causal effect on another's actings, in altering his position in some way. It is that causal connection that produces the possible barrier to the first party being entitled to insist on enforcing his rights, having previously conducted himself in such a way as to induce the other that that was not his intention, or no longer his intention.
[6] From the outset of their submissions, counsel for the reclaimers accepted that, in this case, the reclaimers, in acting in the way they had done by applying the name "Grants" to their bottles of gin and vodka were, in no respect, influenced by the respondents' inaction or conduct or any representation made by them. They did not proceed to use the name "Grant's" because they considered that the respondents impliedly consented to them doing so. The reclaimers did so because they thought that they were legally entitled to do so because of the name's historical connection with the company John Grant (Wine and Food) Limited, which they had acquired in the past. In that state of affairs, having regard to the law as I understand it and, in particular, as it is set out in the case of Cairncross, it seems to me that the reclaimers' case of acquiescence fails, since, having acted in the way they did, they were in no respect doing so because they had been induced into a reasonable belief by the respondents that the respondents were consenting to their conduct. There was simply no evidence that as far as the reclaimers' decision to use the name "Grant's" on their products was concerned, any protest by the respondents, as soon as they knew of this conduct, to the effect that to do so would constitute an infringement of their rights, would have made one whit of a difference to the way in which the reclaimers acted. Indeed, as senior counsel for the respondents pointed out the present litigation was fought, before the Lord Ordinary, on the primary basis that there had been no passing off by the reclaimers, because they were entitled, from the outset, in law, to use the name "Grant's" for their products and that the respondents never had any right to prevent them from doing so.
[7] I should add that it is, in my judgment, a considerable weakness of the reclaimers' formulation of the requirements for the plea of acquiescence to succeed, that, if it were correct, it would impose a significant qualification on the law of prescription, a qualification which would be quite unclear in its scope. As Lord Deas said in the case of MacKenzie v. Catton's Trustees (1877) 5 R. 313 at page 317 "There must either be prescription or not. We are not to rear up new kinds of prescription under different names".
[8] While I would decide the matter simply, on that footing, I should add that, in my judgment, the reclaimers were, in any event, faced with another insurmountable difficulty in this case. What they were arguing for was that the respondents had by their inaction, tacitly consented to the reclaimers passing off their goods as the respondents', for all time coming, and to whatever extent, in relation to gin, vodka and rum. In Earl of Kintore v. Pirie & Sons (1903) 5 F. 818, the Lord Ordinary, Lord Kyllachy at page 839 said:
"Acquiescence may bar objection to what has passed, - to what has been done. But it can never, as far as I know, establish directly, or indirectly, a continuing and perpetual right".
The cases cited in argument, concerned with increases in the burden of existing nuisances, show the reluctance of the courts to find that tolerance of things past may prevent parties from complaining of things future. Notwithstanding those cases, and Lord Kyllachy's dictum, I am prepared to accept that, in principle, it may be possible to instruct, from appropriate facts and circumstances, a case of acquiescence which has the effect of preventing complaints as to future infringements of right. The case of Robson v. Chalmers Property Investment Company Limited 1965 S.L.T. 381 appears to be an example of that. But, in my judgment, the evidence, and the Lord Ordinary's unchallenged findings of fact, in this case, regarding the respondents' conduct, for the reasons fully explained by your Lordship in the chair, came nowhere near establishing facts and circumstances amounting to consent by the respondent to such an unqualified and irrevocable right in the reclaimers to pass off their goods as those of the respondents.
[9] I have reached my conclusions in relation to this aspect of the case simply by reference to the Scots authorities. In the case of Armia v. Daejan Developments Limited 1979 SC (HL) 56 Lord Keith at page 72 said "I would not accept today that no important juridical differences exist between personal bar in Scotland and estoppel in England". I would respectfully agree with that. It is clear to me, from the English authorities cited to this court, that the former sharp distinction between law and equity in England, and the doctrine of consideration in that jurisdiction, have meant that the development of the law of estoppel has proceeded, from time to time, on different lines from that of personal bar in Scotland, although very often the same results will occur in similar situations. Nevertheless I am comforted by the fact that the conclusion which I have arrived at, on this matter, having regard to Scots authorities, is one which would not, it appears, be likely to be different from that which the English courts would arrive at in similar circumstances. In this connection I would refer, for example, to the case of Taylor's Fashions Limited v. Liverpool Victoria Trustees Co. Limited (Note) [1982] 1 Q.B. 133. In that case Oliver J., as he then was, sought to subsume various categories of estoppel, including estoppel by acquiescence, into a common approach which was directed at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which knowingly, or unknowingly, he had allowed, or encouraged, another to assume to his detriment, see pages 151 to 152. I do not consider that Scots law has itself embarked upon reformulating the law of personal bar in terms of unconscionability, nor am I persuaded that it should follow that route. But even when seeking to reformulate English law, in that way, Oliver J. in the Taylor's Fashions case did not, as I read him, discard as unnecessary, in a case like the present, the elements of inducement and reliance - see his Lordship at pages 155D-G and 158E-F. That case turned on the fact that tenants had carried out works on leased premises, at a time when they considered that they had exercised a valid option to renew the leases in question, when, in fact, the options, to be valid, ought to have been registered. His Lordship distinguished the respective positions of the two sets of tenants involved in that case. The first, he said, had carried out the works simply in the belief that the option was a valid option. They had not relied on the fact of that belief. The landlords, moreover, had done nothing to encourage that belief. The landlords in that case were entitled to take their stand on the basis that the options were not valid. The position was, however, different in respect of the second set of tenants. In their case the evidence was that the landlords had actively encouraged the tenants to believe that a valid option had been created and had, indeed, encouraged them to incur expenditure and to alter their position irrevocably on the faith of that supposition. In that situation the landlords were not entitled now to claim that the options had not been validly exercised. That case, in my judgment, demonstrates the need for there to be a causal connection between the conduct or inaction of the person seeking to enforce his rights, and the change of position on the part of the person who is seeking to use that conduct or inaction as a shield against such enforcement. In H.P. Bulmer Limited and Showerings Ltd. v. J. Bollinger S.A. and Champagne Lanson Pere et Fils 1978 R.P.C. 79 Goff, L.J. at page 136 said:
"It seems to me, therefore, that the true test whether equitable relief should be withheld in the case of a continuing legal wrong on the ground of delay by the plaintiff in enforcing his rights is that the facts must be such that the owner of the legal right has done something beyond mere delay to encourage the wrongdoer to believe that he does not intend to rely on his strict rights and the wrongdoer must have acted to his prejudice in that belief".
Subject to the question that I have already raised, as to whether the words "acted to his prejudice" are appropriate, rather than "altered his position", it appears to me that that dictum is entirely reflective of the approach that I consider should be applied in the present case. The case of Electrolux Limited v. Electrix Limited and Another (1953) 71 R.P.C. 23 was concerned with the infringement of a trade mark where one of the lines of defence was that the owner of the mark had acquiesced in its infringement. As I read the judgments of the Court of Appeal, I do not consider that, when dealing with the defence of acquiescence, their Lordships were endeavouring to set out principles which were confined to cases involving registered trade marks. In his judgment Sir Raymond Evershed, M.R. quite obviously, in my opinion, considered that it was an essential element, for a defence of acquiescence to succeed, that there should have been something in the nature of a representation by the party seeking to enforce his rights, which induced the other to have a reasonable belief that the rights were not being insisted upon, or that they would not be enforced. It was insufficient that the plaintiffs had "for a substantial period of time...lain by and not asserted his rights", see page 34-35. Jenkins, L.J., in my judgment also saw the necessity of there being something of the nature of a representation by the owner of the right when he said at page 40 "there was nothing that passed between the parties on the part of the plaintiffs that lulled them (the defendants) into any more security than they took upon themselves the risk and responsibility of supposing to exist".
[10] I have found the recent decision of the Court of Appeal in the case of Farmers Build Limited v. Carier Bulk Materials Handling Limited [1999] RPC 461 to be both illuminating and instructive. That was also an intellectual property case, being concerned with an alleged infringement of registered design rights. A defence of acquiescence was pleaded. It relied upon the plaintiffs having sat by and allowed the defendants to build up a successful business by selling the alleged infringing machines. The defence of acquiescence failed before the Court of Appeal. In his judgment, at page 487, Mummery, L.J. said
"The position is that Farmers Build brought their proceedings for infringement within the limitation period. The pleaded case and the evidence did not establish any reliance by Carier on any representation or conduct of Farmers Build inducing a reasonable belief in Carier that the design rights did not exist or would not be enforced, so as to prevent Farmers Build from enforcing their legal rights within the limitation period. The effect of the judgment was that delay in bringing the proceedings meant that a claim was as good as statute barred, even before the expiration of the limitation period.
There was no evidence to support the judge's conclusion that Farmers Build had in any way encouraged Carier to continue to put time and money into developing their business in the belief that Farmers Build had decided not to pursue a claim for infringement of that design right. There was no evidence that Farmers Build had lulled Carier into a false sense of security or into thinking that Farmers Build had abandoned any intention to pursue a claim against them.
The true position on the evidence was that Carier knew or ought to have known after the determination of the agreement of June 1, 1992 that they did not own any of the designs of the TARGET machine and that any machine made by them including the design might infringe the rights of Farmers Build. Farmers Build had twice intimated to Carier their belief that Carier were infringing their unregistered design right, but Farmers Build had not created any expectation that Carier would not be sued and Carier had not relied on any expectation. There was no evidence that Carier relied on Farmers Build's failure to sue in 1993 or after the visit of the liquidator in May 1994. There was no ground on which any conclusion could be reached that Farmers Build were estopped from pursuing their legal remedies..."
Having regard to what Mummery L.J. said in those passages, I cannot see that his Lordship would have held that a defence of acquiescence had been made out in the circumstances of the present case, had they come before him for his decision. The sort of facts and circumstances which would require to be established before a person passing off his own goods as another's could succeed in a plea of acquiescence are well illustrated, in my judgment, by the case of Habib Bank Limited v. Habib A.G. [1981] 1 W.L.R. 1265 where the plaintiffs' conduct had gone very far, indeed, in leading the defendants to have the very reasonable belief, in the circumstances, that no claim in passing off would ever be made against them.
[11] Although, as I have already said, the present case has to be decided in accordance with Scots principles, I would have been unhappy if, in the field of intellectual property, generally, and in passing off, in particular, the taking of a defence of this character might produce different results, depending on whether the case in which it was taken came before the Scots or English courts. My understanding of the English cases, to which I have just referred, provides me with considerable reassurance that that should not be so.
[12] Before leaving the subject of acquiescence, I should add this. In discussion before this court, reference was made to a number of cases involving encroachment on to the land of one person, by another building on that land, where the defence of acquiescence has been taken in a situation where the landowner sought demolition of the building which had been erected. I accept that it is sometimes difficult to see immediately, in those cases, the components of representation and reliance, which I have found are otherwise required for such a defence to succeed in the law of Scotland. It appears to me that, rather than seeking to place these examples in the paradigm case, it is, perhaps, better to have them treated as forming a class of their own involving, as they do, aspects of land law, including the maxim inaedificatum solo, solo cedit, in situations where it is considered unacceptable to demand the demolition and removal of expensive constructions. I note that these cases are seen to have their own special characteristics also in the law of England, see the Electrolux case supra per Sir Raymond Evershed, Master of the Rolls at page 34 and Jenkins L.J. at page 41. But, in any event, for the reasons carefully set out by your Lordship in the chair they do not provide the reclaimers with support for their formulation of the law to be applied in a case like the present.
The right to interdict
[13] In addressing this chapter of the case, it seems to me crucial not to lose sight of the fact that the reclaimers have not challenged the Lord Ordinary's findings that they have been acting wrongfully in passing off their goods as those of the respondents, since at least 1984, and that they openly admit that they have continued to do so up until the present time. Since I have held that the respondents are not barred from enforcing their rights in respect of the use of the name "Grant's", by reason of acquiescence, the respondents are entitled to a remedy in respect of the reclaimers' wrongdoing. It is important, also, to keep to the forefront of one's mind the fact that, while on his unchallenged findings, the Lord Ordinary did not conclude that the reclaimers, in acting in the way they had, were acting fraudulently, or otherwise dishonestly, he did characterise their conduct as "reckless". At best for the reclaimers, having regard to the Lord Ordinary's findings, their conduct, in my judgment, can be described as involving them sailing very close to the wind. Senior counsel for the respondents accepted that the respondents might be criticised for having made a commercial misjudgment in failing to take action against the reclaimers at a much earlier stage than they did. He was, in my judgment, right to do so. As was said in the case of R. Johnston & Co. v. Archibald Orr Ewing & Co. (1882) 7 App. Cas. 219 "The very life of a trademark depends on the promptitude with which it is vindicated" per Lord Blackburn, at page 230, citing James L.J. in the Court of Appeal. The respondents, however, in my judgment, were correct in submitting that, in the law of Scotland, once a continuing wrong is established, interdict is available as against the wrongdoer virtually as a matter of right, there simply being a discretion in the court to refuse to grant interdict if cogent reasons for withholding interdict are made out. That is well established on the basis of the authorities cited, in submission, before this court. In Clippens Oil Co. Limited v. Edinburgh and District Water Trustees (1897) 25 R. 370, a case concerned with the illegal laying of pipes by water trustees under another's land, Lord Adam, at page 382, said,
"The question does not appear to me to depend on a consideration of the balance of inconvenience or loss which would result to the parties respectively by the removal or non-removal of the pipes, such as we would have to deal with in a question of the granting or refusing of an interim interdict. The operations in question have been found by a final judgment of this court to be illegal, - that is to say, that the respondents had no right or title to construct or place the conduit or pipes where they are, - it is the case of a clear interference by the respondents with the private property and rights of the complainers. In these circumstances, it appears to me that the respondents must shew some cogent reasons why the complainers should not be permitted now to vindicate their established rights, and have the encroachment on their property put an end to".
It is well established also, in Scots law, that the wrongdoer cannot avoid the imposition of interdict against him simply on the basis of the great inconvenience or cost that this would cause him. Yet considerations of that kind were what the reclaimers were relying upon, to a very great extent, in their submissions. In Bank of Scotland v. Stewart (1891) 18 R. 958 Lord Adam, at page 971, said
"I confess it is new to me in the law of Scotland that a person's right, and in that view an undisputed right, is to be taken away because it would be for the pecuniary advantage of another person that he should lose it".
That view was concurred in by the Lord President at page 971 to 972 where he said that
"for the Court to abstain from enforcing a right because that enforcement would cause great inconvenience or pecuniary loss to somebody else is a doctrine which is quite unknown to the law of Scotland".
[14] I am in little doubt that from 1984 the respondents had good grounds for bringing an application for interim interdict to the court in respect of the reclaimers' passing off and that it is likely, on the facts found by the Lord Ordinary, that such an application would have succeeded. The fact that they did not do so, and waited for many years to take action, has caused them, in my judgment, more problems and expense than might well have occurred, had they acted promptly. This case should, perhaps, act as a warning to other traders of the need to be vigilant in protecting their goodwill and intellectual property rights. Be that as it may, standing that the pursuers still have rights to enforce, it is not a proper reason, in my judgment, for withholding interdict simply to punish them for their own commercial misjudgment. The law should not be involved in rewarding wrongdoing and punishing commercial miscalculations.
[15] The two aspects of the law of interdict, which I have referred to above, namely, that it will only be exceptionally withheld, when continuing wrongdoing is established, and that it will not be refused, simply because the effect of granting it will cause the wrongdoer expense and inconvenience, are fully supported in the speeches of the House of Lords in the case of Grahame v. Magistrates of Kirkcaldy (1882) 9 R (HL) 91 - see Lord Watson at pages 91-92, page 95, Lord O'Hagan at page 98 and Lord Blackburn at page 99. Moreover, I agree with senior counsel for the respondents' submission, when he said that it would be a strange exercise of discretion, if the court, having rejected delay and acquiescence as a substantive defence in this case, were then to use the same factors to punish tardiness on the part of the respondents, by refusing to grant them the only truly effective remedy available for them to enforce their rights. One example of the courts in England avoiding such a result, in the field of passing off, is the case of My Kinda Town Limited v. Soll and Another (1983) R.P.C. 15 where Slade J. having decided (with some hesitation, it seems) that there was no acquiescence on the part of the plaintiffs, such as to have destroyed their rights, was not persuaded that, nevertheless, they should be deprived of an injunction.
[16] The Scots authorities, in my judgment, provide no basis for withholding the remedy of interdict in this case. Interdict might be refused in a suitable case, where, for example, the public interest would in some way be significantly affected if interdict were to be pronounced, or where there is a clear disproportion between the benefit to be conferred by granting the interdict, on the one hand, and the consequences of not granting it, on the other, so that it could not be seen to be equitable to grant the interdict. No such facts are made out by the reclaimers in this case. The unchallenged findings of the Lord Ordinary are to the effect that substantial loss will be incurred by the respondents, in the future, if the reclaimers are allowed to continue using the name "Grant's", which loss the respondents would find it difficult to quantify. The reclaimers have been making profit out of their wrongdoing for many years now. In so doing, they took the risk that they would, at some stage, be prevented from doing so. There is, in any event, in my judgment, some serious doubt, standing the respondents' willingness for the interdict to be suspended, in its effect, for a period, to allow the reclaimers to rebrand their goods, that the reclaimers will necessarily lose their established business, in the white spirits market, to any significant extent, and with any significant consequential loss of business and employment. For all the foregoing reasons I am satisfied that the respondents are entitled to interdict.
The territorial effect of the interdict to be granted
[17] As far as the reclaimers' ground of appeal directed against the form of interdict, having extra-territorial effect, is concerned, I am of the opinion that this ground of appeal is ill-founded. As is said in Burn Murdoch Law of Interdict at para. 348:
"Defenders whose residence or business lies within Scottish jurisdiction can by interdict, operating in personam, be restrained from making infringing use of the pursuers' marks anywhere throughout the world."
Orders having such an effect have been granted since at least the case of Johnston v. Orr-Ewing (1882) 7 App. Cas. 219 - see e.g., in Scotland, Price's Patent Candle Co. v. Ogston and Tennant (1909) 26 R.P.C. 797 and John Walker & Sons Limited v. Douglas McGibbon & Company 1972 S.L.T. 128 and, at least where passing off is established as occurring in this jurisdiction, and there is evidence of misrepresentation in foreign markets, causing, or likely to give rise to, confusion, it is unnecessary for the party seeking such an order to show that the activity in question is actionable in the relevant foreign markets. The Lord Ordinary's unchallenged findings, in my judgment, demonstrate that there was ample evidence in this case of such confusion occurring abroad. I am not persuaded that any developments in the field of private international law since the case of Johnston v. Orr-Ewing, which were referred to in submission by counsel for the reclaimers, have had any effect on the appropriateness of such orders, which appears to me to be based on sensible considerations of effectiveness and expediency, avoiding the need for continuing and repeated expensive litigation being brought against a party over whom this court clearly has jurisdiction.
[18] Lastly, and for completeness, I would simply add that I consider the reclaimers' ground of appeal based on European Union law to be, for all the reasons given by your Lordship in the chair, entirely without merit.