In March of this year Collyer Bristow was successful in obtaining judgment for its client Timesource Limited in relation to the passing off of its HENLEY branded watches. This judgment has subsequently been upheld by the Court of Appeal.

Giving the leading judgment Arden LJ (with whom Pill LJ and Black LJ agreed) said:

"In my judgment, the judge was entitled to reach the conclusion that the appellants had misrepresented their watches produced under the name HENLEYS as those of the respondents. The judge gave a clear, comprehensive and succinct judgment and no error of law or fact in it has been shown."

In brief, the decision is interesting on 3 points:

  1. The Judge's ability to draw inferences of confusion in passing off case when there is little or no actual evidence of confusion;
  2. Whether evidence of confusion in passing off has to be "the right way round", as contrasted with trade mark infringement;
  3. Whether a judge has to reach an express finding that there has been "substantial" deception or whether this can be implied from his judgment. This is not a matter of counting heads but is both a qualitative as well as quantitative question.

Facts

The Claimants/Respondents were importers and wholesalers of HENLEY branded watches and the Defendants/Appellants, one of whom had an existing business branded "HENLEYS" for youth streetwear, had launched a line of fashion watches at a similar price range and through similar trade channels. The Claimant also has a trade mark registration, but this is the subject of invalidation action at OHIM and so formed no part of this decision.

Initially the First Defendant had requested and been granted a licence from the Claimants. The licence was in respect of the use of the mark HENLEY in respect of watches to be branded HENLEYS. Importantly the licence contained provision for payment of a royalty and quality control safeguards which were actively enforced. At the end of 2009 the Defendants terminated the licence and decided to continue to sell their product without it. The Claimants sued for passing off and won on liability.

Appeal

On appeal, the Defendants argued that

  1. the judge drew the wrong inferences from the evidence of misrepresentation. Much of the witness evidence was "the wrong way round", with trade customers thinking that the Claimants' HENLEY watches were the Defendants' HENLEYS watches;
  2. the judge had not taken the licence into account, and since the Defendants had not been in breach of the safeguards for the Claimant, there was no passing off while it was in force, and the Defendants had not changed the way they sold their watches post-termination;
  3. the Second Defendants' concurrent goodwill in "HENLEYS" for clothing had not been given sufficient weight;
  4. the judge failed to consider whether the misrepresentation had been made to a substantial number of members of the public: he was relying solely on his own impression; and
  5. since the judge had found there was no erosion of the HENLEY brand, he could not logically say that the Claimant had suffered damage by likely loss of sales.

It was held that, while there was little direct evidence from the witnesses of operative, non-transitory misrepresentation, following Spalding v Gamage the judge was not bound by this to reach the conclusion that misrepresentation was not made out. He was entitled to form his own judgment as to whether there had been a misrepresentation after assessing the totality of the evidence.

He was also entitled to leave the licence out of account since there were arguments on it that cut both ways. On concurrent goodwill, the judge had dealt with this at length and reflected it in the injunction that he made. However, concurrent goodwill did not constitute a defence to passing off because the Second Defendant did not prove that it had goodwill in the name HENLEYS on its own in the field of watches. Unless he was plainly wrong the Appeal Court would not intervene.

On substantiality, the judge considered that HENLEY and HENLEYS are virtually identical and was entitled to reach the view that they would be perceived as such by all, or almost all, prospective purchasers. It followed that a substantial number of members of the public would be involved. The judge gave reasons for holding that the misrepresentation would be the "right" way round: purchasers of watches were more likely to know of HENLEY watches than HENLEYS clothing, which was known only in the youth market. At paragraph 47 her ladyship said:

"The situation, in which a judge is faced with limited evidence of misrepresentation and clear evidence of confusion, is exactly the sort of situation in which the judge is justified in giving more weight to his own experience and to the other evidence, especially the "real" evidence, as I have called it, than to the evidence of the witnesses. As I see it, that is what happened here. Given the judge's clear findings as to very substantial similarities between the watches, in my judgment, the judge was entitled to give the deciding weight to that other evidence and to conclude in substance that there would be a substantial number of people who would be actually deceived."

On damage, the judge was entitled to infer a loss of sales. There is no absolute requirement for damage to be substantial, and his finding was not on the facts undermined by his quite separate finding that there was no damage to goodwill. Damage need not be shown under more than one head. Thus the judge's rejection of erosion of goodwill as a head of damage did not undermine his conclusion that there was a likely loss of sales.

This is an interesting decision as it confirms that there may be a number of reasons why evidence of actual confusion may be limited or absent. Indeed the more complete the passing off the less likely an individual is to realise it. Ultimately it will be for the Judge to decide upon the likelihood of confusion based on the evidence before them.