Yours Naturally Naturally Yours Limited v Kate McIver Skin Limited & Anor

The fundamental principle underlying the law of passing off may be simply stated. Putting it into contemporary language, it is this: no person may misrepresent their goods or services to be those of another person. Defining the tort more precisely has proved difficult, however. A number of eminent judges have attempted to formulate statements of its essential ingredients, but there is no test that is universally applicable.

The most comprehensive statement remains that of Lord Diplock, with whom Viscount Dilhorne, Lord Salmon and Lord Scarman agreed, in Erven Warnink BV v J. Townend & Sons (Hull) Ltd [1979] AC 731 (the Advocaat case) at 742:

Lord Diplock immediately went on, however, to warn:

In many cases of alleged passing off, the most useful formulation is that of Lord Oliver of Aylmerton, with whom Lord Bridge of Harwich, Lord Brandon of Oakbrook and Lord Goff of Chieveley agreed, in Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491 (the Jif Lemon case) at 499:

Although Lord Oliver referred in this passage to “goodwill or reputation”, it is clear that goodwill is required and that mere reputation does not suffice: see Starbucks (UK) Ltd v British Sky Broadcasting Group plc [2015] UKSC 31, [2015] 1 WLR 2628. Thus the three core ingredients of the tort are (i) goodwill owned by the claimant, (ii) a misrepresentation by the defendant and (iii) consequent damage to the claimant.

There are some cases of passing off which do not fit easily within Lord Oliver’s formulation although they do fit within Lord Diplock’s. One category of such cases concerns what is sometimes called either “reverse” or “inverse” passing off, although I do not myself find either term helpful. The three leading authorities on this class of case are all decisions of this Court.

In Samuelson v Producers Distributing Co Ltd (1931) 48 RPC 580 the plaintiff was the author under his stage name Lawrie Wylie of a humorous sketch, The New Car, which had been performed successfully before the King and Queen at a Royal Command Performance and had attracted favourable reviews. The defendants retained the principal comedian from the sketch to write and perform a film version, which emerged as totally different to the original. The defendants used misleading quotations from newspaper reviews of the Command performance to advertise their film as if it was the sketch which had pleased the King and Queen. Lord Hanworth MR, with whom Lawrence and Romer LJJ agreed, saw no difficulty in holding at 588 that this was passing off:

In Plomien Fuel Economiser Co Ltd v National School of Salesmanship Ltd (1943) 60 RPC 209 Lord Greene MR, with whom Luxmoore and du Parcq LJJ agreed, had similarly little difficulty with a case he described at 213-214 as follows:

In Bristol Conservatories Ltd v Conservatories Custom Built Ltd [1989] RPC 455 one of the individual defendants had worked for the plaintiffs as a salesman and had kept a book of photographs showing conservatories designed and built by the plaintiffs. On his joining the defendant company, which was a newly established business, he and other salesmen used the photographs to show to prospective customers as examples of conservatories which the defendants had supposedly supplied. The plaintiffs successfully appealed from an order striking out the statement of claim as disclosing no reasonable cause of action. Ralph Gibson LJ, with whom Sir Stephen Brown P and Butler-Sloss LJ agreed, followed Samuelson and Plomien, and rejected an argument that the House of Lords in the Advocaat case had confined passing-off to its classic form and so-called “extended” passing off. He said at 464-465:

The only other case that it is necessary to mention is ScanSafe Ltd v MessageLabs Ltd [2006] EWHC 2015 (Pat). The claimant had developed an internet security system. The defendant entered into a reseller agreement with the claimant which enabled the defendant to market the system under its own name i.e. what is often called a “white label” arrangement. The defendant had given notice terminating the agreement, and had started marketing its own system. The claimant contended that the defendant was passing off the new system as originating from the same source as the previous system by describing it as “Version 2” or “2.0”, relying upon Bristol Conservatories, and sought an interim injunction. Patten J held in an extempore judgment that the claimant had an arguable case:

For reasons that will appear, I need to set out YNNY’s pleaded case on passing off in paragraph 25 of its Amended Particulars of Claim. For clarity I shall set out the amended text without showing the amendments:

The First Label is similar but not identical to what the judge called the First McIver Label, while the Second Label is what the judge called the Second McIver Label. Sub-paragraph (vi) refers to what I have called the Fourth McIver Label. The First Imitation is what the judge called the First Pelham Reformulation and the Second Imitation is what the judge called the Second Pelham Reformulation.

It has to be said that this pleading is rather muddled. Nevertheless, four points are clear. First, YNNY did not plead any case that it owned goodwill associated with the name Elixir, still less any case that Ms McIver or KMS had misrepresented the trade origin of their product by use of that name. Secondly, YNNY did plead a case that it owned goodwill as the originator of the serum supplied to Ms McIver and KMS. Thirdly, YNNY alleged both that Ms McIver and KMS had misrepresented Ms McIver to be the originator of the serum rather than Ms Tang and that Ms McIver and KMS had misrepresented the origin of their products as being the same as that of the Elixir serum. Fourthly, YNNY explicitly relied on Bristol Conservatories and ScanSafe.

The judge set out the law at [46]-[53], citing Advocaat, Jif Lemon, Starbucks, Plomien, Bristol Conservatories and one other authority. Neither side criticises his exposition of the law.

The judge noted at [54] that the first occasion on which Ms McIver had allegedly mispresented that she created the Elixir serum was on 6 June 2018, which fixed the date by which YNNY had to establish goodwill. He held at [55] that Ms Tang’s business had acquired goodwill by that date.

The judge’s reasoning with respect to goodwill and misrepresentation was as follows:

The judge dealt with the question of damage as follows:

The Defendants appeal on three grounds. Ground 1 is that the judge was wrong to find at [56] that YNNY owned goodwill “associated in the public mind with the trade name ‘Elixir’” because no such case had been pleaded. YNNY has no real answer to this ground, and I accept it. YNNY contends by a respondent’s notice that the judge ought to have found that goodwill was associated with YNNY’s product and with YNNY (as successor to Ms Tang) as the originator of that product. The Defendants have no real answer to this contention, and I accept it. Indeed, I think it is implicit in some of the judge’s reasoning, as I will explain below.

Ground 2 is that the judge was wrong to find that Ms McIver and KMS had made the misrepresentations set out in the judgment. There are a number of strands to this ground which I will take in turn.

First, the Defendants again complain that, insofar as the judge’s reasoning was based on use of the trade name Elixir, no such case had been pleaded by YNNY. Again, I agree with this.

Secondly, the Defendants dispute the judge’s statement in [58] that “no alternative” interpretation of Ms McIver’s 6 June 2018 Instagram post was advanced by them. Counsel for the Defendants said that he had advanced an alternative interpretation, namely that what Ms McIver had meant was that she had created the treatments her customers received rather than the serum itself. Counsel for the Claimants accepted that counsel for the Defendants had put this forward. As he submitted, however, the judge evidently did not regard counsel for the Defendants’ interpretation as a realistic alternative. The same complaint is made about the other statements relied upon by YNNY and the answer is also the same.

Thirdly, the Defendants submit that the judge failed to interpret the 6 June 2018 Instagram post and the other statements from the perspective of the relevant consumer, and therefore misinterpreted them. I do not accept this. Although he did not say in terms that that was what he was doing, the judge as a specialist in this area of the law will have been well aware of the need to view matters from the perspective of the average consumer. He clearly had the relevant section of the public in mind for the purposes of both the claim for passing off and a claim by YNNY for malicious falsehood, because he said as much at [69]. In any event, as counsel for YNNY pointed out, the Defendants have not identified any attributes of the relevant consumer that would have led them to interpret the statements in question in any different way to the judge. Misrepresentation in passing off cases is a question of fact: see Lord Oliver in Reckitt & Colman (cited above) There is no single meaning rule, and it is sufficient if a substantial number of consumers would be misled: see Neutrogena Corp v Golden Ltd [1996] RPC 43. In my view the judge was entitled to find that Ms McIver had misrepresented that she was the creator of the serum. Furthermore, even if the judge was wrong about the 6 June 2018 Instagram post, he was plainly right about most of the other statements relied on by YNNY.

Perhaps more importantly, the judge was also entitled to find in [59]-[60] that Ms McIver and KMS had misrepresented that the First Pelham Reformulation and the Second Pelham Reformulation were “the same serum as had been sold as the Elixir serum” i.e. the Tang Formulation.

Fourthly, the Defendants submit that, even if the statements complained of were false, the misrepresentations were not material because they did not give rise to any relevant deception of consumers. Whatever might be said about the misrepresentation that Ms McIver was the creator of the serum, I cannot accept this submission so far as the misrepresentation that the Reformulations were the same serum as had been sold as the Elixir serum is concerned. That involved deception of KMS’s customers into thinking that they were getting the same product as before when in fact they were getting a different product. This falls squarely within the Samuelson/Plomien/Bristol Conservatories line of authority.

Ground 3 is that the judge was wrong to find that the misrepresentations were damaging to YNNY’s goodwill. It is convenient before considering this to address YNNY’s contention by way of its respondent’s notice that the judge was wrong to hold in [64] that it had not established any loss of sales. YNNY points out that one of its pleaded heads of loss was loss of sales by YNNY to KMS. YNNY further points out that, although the judge said that “there can have been no lost sales” after 30 November 2018, he did not give any reasons for rejecting that claim as opposed to the claim that YNNY had lost sales through other channels. I suspect that this is because the judge thought that the reasons were obvious. As Stuart-Smith LJ pointed out during the course of argument, the misrepresentations may have facilitated KMS’s sale of the Reformulations rather than YNNY’s product, but they were not necessary to enable KMS to sell the former rather than the latter. In other words, the misrepresentations were not causative of any loss of sales from YNNY to KMS.

Turning to ground 3, this has two strands. First, the Defendants contend that it was not open to the judge to find damage due to a risk of genericisation of the name Elixir because, as discussed above, YNNY had not pleaded any case based on goodwill in that name. Again, I agree with this.

Secondly, the Defendants contend that the judge was wrong to find that there was a risk of damage to the reputation of YNNY’s product, and hence to YNNY’s goodwill. I do not accept this. The risk stems from the misrepresentation discussed in paragraphs 60 and 61 above. As the judge said, there is evidence that at least one customer (YNNY says five customers) found the First Pelham Reformulation unsatisfactory. Consumers who were deceived into thinking that this was the same product as YNNY’s product would be liable to regard YNNY’s product with the same dissatisfaction.

There is no dispute that Ms McIver and KMS used some marketing materials written by Ms Tang on their website and in social media posts. Nor is there any dispute that copyright subsists in such materials as original literary works which is now owned by YNNY.

YNNY’s pleaded case was that Ms McIver and KMS had infringed its copyrights in three ways: (i) copying the copyright works contrary to section 17 of the Copyright, Designs and Patents Act 1988; (ii) issuing copies of the works to the public contrary to section 18 of the 1988 Act; and (iii) possessing and/or exhibiting in public and/or distributing copies of the works contrary to section 23 of the 1988 Act. The third plea was defective on its face because no knowledge or reason for belief was pleaded, although no application was made to strike it out on this ground.

More importantly, the second plea was inapposite because the infringing acts complained of all concerned online use and did not involve tangible copies. Despite this, paragraph 40 of the Defence admitted that “the First Defendant and Ms Dyment have issued copies of certain of the materials … to the public and made copies of such materials, where such materials appear on the Kate McIver website or on Kate McIver social media accounts”. No point was taken either in the Defence or by the Defendants at trial that the acts in question were only actionable under section 20 of the 1988 Act (communication to the public) and not section 18.

The only defence to infringement pleaded in the Defence, at paragraph 47, was that “for the period in which Ms Dyment was retailing the serum manufactured by Ms Tang she had an implied licence to use the marketing descriptions used by Ms Tang, including a licence to market the goods using any parts of that material in which Ms Tang owned the copyright”.

The judge dealt with this issue in his judgment at [82] as follows:

In his order, the judge: (i) recited that YNNY succeeded in its claim for “any infringement of copyright after 30 November 2018”; (ii) accepted an undertaking by KMS not to infringe YNNY’s copyright in the works in question; (iii) ordered the Defendants to make and serve a witness statement “setting out to the best of their knowledge the use of the Claimant’s copyright materials since 30 November 2018”; and (iv) gave YNNY liberty to apply for a trial on quantum covering both copyright infringement and passing off.

The Defendants appeal on the ground that the judge should not have granted relief for copyright infringement without making any finding of copyright infringement. YNNY does not dispute this, but contends that the judge should have found that KMS had committed infringing acts after 30 November 2018. This contention should have been included in the respondent’s notice, but the Defendants sensibly took no point on that omission given that the contention was clearly advanced in YNNY’s skeleton argument.

In support of this contention, YNNY relies on the fact that, during the course of the trial, its solicitors ascertained that the social media posts complained of were still displayed on KMS’s account. This was drawn to the court’s attention, and the Defendants did not dispute it. Furthermore, Mr McIver accepted in cross-examination that he himself had not deleted any social media posts and did not suggest that anyone else had. YNNY contends that the continued availability of such posts after 30 November 2018 constituted a continuing infringement.

The Defendants do not dispute that the social media posts in question remained publicly accessible after 30 November 2018. Nor do they dispute that the posts targeted UK consumers. Instead, counsel for the Defendants argued that this was not a continuing infringement. In my judgment this contention is not open to the Defendants given (i) the admission in paragraph 40 of the Defence, (ii) the Defendants’ failure to take the point that the acts were only actionable under section 20, not section 18, and (iii) the Defendants’ reliance upon implied licence as their sole defence. If the claim had been framed as one of communication to the public contrary to section 20, the availability of the posts after 30 November 2018 would clearly have constituted a continuing infringement.

For the reasons given above I would dismiss the appeal.