What has happened?

• The Court of Appeal has issued an important ruling on passing off, focusing on the damage requirement of the tort (which must be proved in addition to goodwill and a misrepresentation). This is a different issue from quantifying damage (or an account of profits) once passing off has been established. 

• Where the claimant and defendant operate in overlapping business fields, damage (such as diversion of business or damage to reputation) is usually easy to demonstrate. Here, the Court was considering damage where the parties operate in completely different fields. 

• The case confirms that lost licensing income and undermining a licensing business can both be sufficient grounds for establishing damage in certain circumstances. 

• The Court also considered – and amended – the wording of a declaration of non-infringement that the parties had both consented to the trial judge granting to remove uncertainties.

Want to know more?

Background

This case concerned the use by the defendants/respondents of various easyLiveAuction.com figurative marks for auctions, which the claimants/appellants said infringed and passed off its "easy" marks and signs. 

The High Court had originally found that certain uses of easLiveAuction.com infringed the claimant's EASYJET and easyMoney trade mark registrations, not because of a likelihood of confusion (that claim failed) but because the uses in question took unfair advantage of the reputation of those registrations.

However, the Court had also held that there was no passing off – while the claimant had goodwill in its easyJet sign (in relation to airline travel) and its easyProperty sign (in relation to residential property sales and lettings and similar services) and there was an actionable misrepresentation, there was no damage to goodwill.

The Court of Appeal has now ruled that passing off should also have been found, holding that damage resulted from both the claimant's lost opportunity to licence the defendants and the undermining of the claimant's licensing business.

Lost opportunity to licence the defendants

The Court noted that there is established precedent that lost licensing income from the defendant is sufficient to fulfil the damage element of a passing off claim (see eg Irvine v Talksport). Furthermore, the juridical basis for passing off is invasion of property, so it naturally follows that damages assessed according to the user principle should be available. 

However, given that damage is an ingredient of the tort itself, the Court held that:

• "…a claimant who has no existing or prospective endorsement or licensing business cannot rely solely upon the loss of the fee that it would have charged for consenting to the acts complained of as completing its cause of action…"

• "…but a claimant which does have an existing endorsement or licensing business can in principle rely upon the loss of that fee for that purpose even if the acts complained of are not of precisely the same kind as the claimant has previously endorsed or licensed; and the same may be true of a claimant which has a prospective endorsement or licensing business (eg a celebrity who has not yet started such a business but is at the point where they could do so)." 

Here, the claimant was on the right side of the line, having a well-established licensing business including easyProperty.

Undermining the claimant's licensing business

The Court also ruled that damage could result from the fact that the presence of an unlicensed operator could significantly undermine the claimant's chances of attracting paying licensees in that field. 

The defendant's only argument was that the claimant had adduced no evidence of this. However, the Court held that such damage could be inferred from the nature of the claimant's business and the judge's findings on misrepresentation. 

The Court's reasoning on this ground is very short. In particular, it does not state the relevance of whether or not the claimant has an existing or prospective licensing business to any claim for damage on this ground.

The declaration of non-infringement

The Court also considered – and amended – the wording of a declaration of non-infringement that the parties had both consented to the trial judge granting to remove uncertainties.

What does this mean for you?

The decision confirms that lost licensing income and opportunities can be sufficient – in certain circumstances – to fulfil the damage requirement for passing off.

The case illustrates that all elements of a claim must be made out – damage (which is usually relatively easy to make out for passing off) cannot simply be assumed.