A recent decision of the UK Court of Appeal raises some interesting issues concerning trademark infringement and passing off relating to the sale by the defendant of genuine goods manufactured by the plaintiff. This type of claim can arise in grey marketing cases, but this case was different.
The plaintiff, an Italian manufacturer, sells combinable charm bracelets and links in association with the trademark NOMINATION. The charm bracelets consist of individual links that can be fastened together in different combinations. When the plaintiff sold its products to retailers it came with packaging prepared by the plaintiff. The packaging gives the impression that its contents are of high quality.
The plaintiff sells its products through a large selective distribution network consisting of approximately 300 independent retailers in the UK. The plaintiff was successful in establishing itself as a supplier of luxury jewelry.
The defendant sold combinable charm bracelets and links in association with the trademark DAISY CHARM. The defendant’s packaging was inferior to the plaintiffs and primarily consisted of plastic bubble wrap. The defendant was a smaller operation and did not position itself as a luxury supplier.
The defendant sold packaged jewelry in two types of plastic blister-style packages. The first package contained NOMINATION and DAISY CHARM brand charms with a DAISY CHARM link. The second package contained DAISY CHARM brand charms with a NOMINATION link with its trademark visible in an attached small plastic bag with a label stating “Manufactured by Nomination Italy repackaged by” the defendant.
The defendant also used advertising that contained these statements
"... Italian charm-DAISY CHARM plus Nomination charm.
Family charm of your choice by Daisy charm® plus you also get a single branded Nomination link for your bracelet. So you will receive one branded Daisy charm and one plane Nomination link, both compatible and for the classic size bracelet.”
The plaintiff sued for infringement of its registered trademarks and passing off. The trial judge concluded that the defendant had supplied NOMINATION-based links to their customers either in a small blister package or a small transparent plastic bag. No one could say that the defendant’s packaging conveyed an impression of quality.
The judge was satisfied that the elegant packaging for the plaintiff’s bracelets conveyed an image of luxury to purchasers which increased the reputation of the plaintiff’s marks. The defendant’s actions and the use of its packaging would likely damage that reputation. There was evidence of consumer confusion. The action was allowed for both trademark infringement and passing off.
On appeal, the judges had concerns with the claim for trademark infringement because infringement is typically predicated on the defendant’s actions relating to non-genuine goods. They thought it was more appropriate to deal with the claim based on passing off. The same relief was available to the plaintiff if the claim was restricted to passing off.
To succeed with an action for passing off the plaintiff must show:
the existence of goodwill or reputation attached to the goods supplied, in the mind of the purchasing public by an association with an identifying trademark or get up, which is recognized by the public as distinctive of the plaintiff’s goods;
a misrepresentation by the defendant to the public (whether intentional or not) leading or likely to lead the public to believe that the goods offered by the defendant are the goods of the plaintiff;
damages suffered or that it will likely suffer by reason of the defendant’s actions.
The plaintiff owned considerable goodwill in its trademarks. The trial judge found that using the plaintiff’s trademark in advertisements led a significant proportion of the relevant public to believe that the DAISY CHARM links were supplied by the plaintiff. This was damaging to the plaintiff. All three judges agreed with this reasoning and thought it was supported on the facts and dismissed the appeal.
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These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.
A version of this article originally appeared on the Lawyer’s Daily website published by LexisNexis Canada Inc.