A recent case in England allowed a claim for extended passing off by the producers of Greek yogurt against the producers of a yogurt produced in the U.S. and sold in the UK as Greek yogurt.
The plaintiff is the dominant supplier of Greek yogurt in the UK market. The defendant is a U.S. company established by Turkish owners who had gained a substantial market share in the United States of yogurt sold there as Greek yogurt. The defendant decided to introduce this product to the UK market.
Yogurt is a form of fermented milk. Thickened creamy yogurt is derived from ordinary yogurt by two main processes. The first generally called straining involves the separation and removal of the watery whey. The second involves the use of thickening agents to achieve a similar result.
It was clear and not seriously in dispute in the action that all yogurt sold in the UK for the previous 25 years before the trial with descriptions including the words “Greek yogurt” on the labels was strained yogurt made in Greece. This appears to have arisen as a result of an unwritten industry wide labeling convention.
The convention did not apply to the U.S. In fact, both of the parties sold yogurt referred to as Greek yogurt in the U.S. that was made in the U.S. rather than Greece.
When the defendant introduced its product to the UK market it was described as Greek yogurt. The defendant’s product was made using an industrial straining process but was manufactured in the United States. The primary label of the defendant’s packaging used the phrase “Greek yogurt” but in very small print on the back of the package it was said that the product was made in the U.S. In essence the defendant’s position was that ‘Greek” yogurt was not yogurt from Greece but yogurt made through a process that results in a product with the attributes of the Greek style.
The primary legal issue dealt with by the trial judge concerned what proportion of the purchasing public must be shown to have a common understanding of the meaning or reputation attributable to the phrase “Greek yogurt” in order to allow the plaintiff to succeed.
Extended Passing Off
This case came within the category of extended passing off cases where plaintiffs have successfully brought proceedings relating to terms which were, in effect generic, such as champagne, sherry, whisky, Swiss chocolate and most recently vodka.
In order to succeed, the plaintiff in such action has to show that
- the plaintiff’s business consists of, or includes, selling a class of goods to which the particular trade name applies;
- the class of goods is clearly defined, and that in the minds of the public, or a section of the public, the trade name distinguishes that class from other similar goods;
- because of the reputation of the goods, there is goodwill attached to the name;
- the plaintiff, as a member of the class of those who sell the goods, is the owner of goodwill which is of substantial value;
- that the plaintiff has suffered, or is really likely to suffer, substantial damage to its property in the goodwill by reason of the defendants selling goods which are falsely described by the trade name to which the goodwill is attached.
When the relevant trade name is descriptive of a geographic region or location as the place of manufacture the plaintiff will fail unless it can establish “something more”. The trial judge said that all the plaintiff needed to show to overcome this hurdle was that a significant section of the public believed that the trade name denoted a sufficiently defined and distinctive class of product with some attraction for customers.
The trial judge concluded a substantial portion of those who buy Greek yogurt in the UK (probably well in excess of 50% of all Greek yogurt buyers) think the product is made in Greece and the proportion of those Greek yogurt buyers to whom it matters is substantial. This was consistent with the fact that there had been a labeling convention with respect to its Greek place of manufacture for more than 25 years.
Having made this finding concerning the existence of goodwill, the use of the term “Greek yogurt” to describe yogurt not made in Greece plainly involved a material misrepresentation.
With respect to showing actual or threatened damage the judge said that typically this can be shown by either a loss in sales or erosion of the distinctiveness of the trade name sought to be protected. The judge concluded that the defendant’s launch of its product in the UK market would result in a loss of distinctiveness in the description “Greek yogurt.” As a result the action was allowed.
It seems that the common law is alive and well. The courts by using the passing off cause of action are able to provide an effective and flexible remedy.