In McCambridge Ltd v Joseph Brennan Bakeries  IEHC 269 (27 May 2014), the High Court considered the correct approach to assessing an account of profits for passing off. The Court held that the defendant was obliged to account to the plaintiff for such portion of its profits as were attributable to its decision to dress up the packaging of its sliced brown bread in a get up that unintentionally passed it off as the highly-regarded loaf of the plaintiff.
The Court highlighted that the purpose of an account of profits is not to punish an infringer, but to remove from the infringer any unjust enrichment through stripping out the profits attributable to the infringement.
On 31 July, 2012, the Supreme Court held that the defendant was liable for passing off. The Court ruled that the defendant's brown bread packaging was confusingly similar to that used by the plaintiff. The plaintiff elected an account of profits in preference to damages as a remedy, on being required by the defendant to choose one or the other.
In these proceedings, the defendant argued that the correct approach to an adjudication of an account of profit in passing off should only require the ascertainment and payment of such profits as were made due to the passing off; only such sales as could properly be attributed to the tortious action, ruling out any gain to be made from those who were not confused but made a properly informed choice.
The plaintiff argued that the Court should require the defendant to pay profits in respect of all goods which tortiously were decked out and sold so as to resemble their product. This would mean that all profits made on the brown bread by the defendant from the commencement of the offending packaging would become those of the plaintiff.
The High Court made an Order for an account of those profits of the defendant which were attributable to its decision to dress up the packaging of its sliced brown bread in a get up that unintentionally passed it off as the highly-regarded loaf of the plaintiff. The Court ordered up to three hours to be set aside in that regard at a proximate time in the commercial list.
This decision accords with modern authority derived from patent and copyright cases. Charleton J. noted that: "If there is a case for trademark cases to be considered as giving a complete entitlement to all profits earned, and if some passing off cases are so blatant as to be equivalent thereto, the facts of this case do not fit such category."
Charleton J. usefully summarised the principles derived from the authorities in this area. These include:
- If through legislation a wronged plaintiff in an intellectual property case is enabled to choose either damages or an account of profits, or if that choice is left to the court on making a finding of liability, it is a matter of statutory construction as to how the court proceeds as to the choice of remedy.
- Since an account of profits is an equitable remedy, restorative rather than punitive, it may be refused by the court if the result is unfair.
- At common law, a wronged plaintiff in intellectual property actions, particularly passing off, retains the right to seek an account of profits as opposed to damages. However, where an injunction is sought but is not granted on the discretionary basis that damages are an adequate remedy, the plaintiff will be left without the choice of an account in compensation for the tort.
- The form of account of profits in trade mark cases is ordinarily for the entirety of the profits made in articles/services wrongly bearing the mark, but instances exist where even a trade mark owner cannot fairly claim the entirely of profits.
- Some passing off cases are close to trade mark cases as to their colourable nature and the blatant approach of the tortfeasor, hence, in those circumstances there is little warrant for seeking a nuanced approach of division of profits.
- In patent and copyright cases, only the portion of profits properly attributable to wrongful misuse and copying, respectively, are recoverable as an account of the profits.
- Ordinarily, where a new product is put on the market and passed off by a defendant who has never produced that product before as that of the plaintiff, or where the expiry of a licence to use indicia of goodwill has been deliberately ignored, the measurement of an account tends to be all profits.
- Though intention has long ceased to be part of the ingredients of passing off, provable malice may make it more worthwhile for a plaintiff to seek damages than an account of profit, because damages in such cases may be aggravated or exemplary.
- A broad approach to apportioning profits should be taken by a court, remembering that the plaintiff is the wronged party and that obscure argument by economists is not what drives consumption in the marketplace.
- Apportioning profits is not an impossible task.