Woolley & Anor v Ultimate Products Ltd & Anor

In this action the Claimants seek injunctive and other relief for the tort of passing off. The case concerns use of a mark very similar to the mark HENLEY which the Second Claimant company (“Timesource”) uses as a brand name for a line of watches and a few other items which it sells. The mark HENLEY is also in fact a registered Community Trade Mark (“CTM”) under certain classes of goods, and the Particulars of Claim complain of both passing off and infringement of this CTM. However, the commencement of this action postdates an application by the Second Defendant (“HCL”) in the Office for Harmonisation in the Internal Market challenging the CTM. The Defendants sought a stay of this whole claim pending the outcome of that challenge. A stay of the CTM infringement claim is mandatory in these circumstances, and it was undisputed that there should be such a stay of that part of the claim. Nevertheless, Master Bragge directed that the passing off part of the claim should be determined. In these circumstances the action, only insofar as concerned with passing off, came on for trial before me.

The CTM claim which is currently stayed covers a variety of goods. For the purposes of the passing off claim, however, Mr Malynicz on behalf of the Claimants acknowledges that the claim could only be maintainable in relation to three types of product: (1) watches (2) jewellery and (3) bags. Of these goods, it is the claim in respect of watches which is the most important and which took up the major part of the trial.

Mr Woolley, the First Claimant, has his business background in the watch import and trade sales business. He was a joint founder of what became a substantial watch business carried on by a company which came to be called Peers Hardy UK Limited. He resigned as Managing Director of that company in 2003, and after a spell as consultant to a French business he founded Timesource. It began trading around mid-2004. Mr Woolley is the Managing Director. The watch sales business has been conducted by the company since then, although in fact the CTM for HENLEY is held in Mr Woolley’s personal name. Doubtless, that is the reason for Mr Woolley being a Claimant in this action, although it is Timesource which is the owner of the relevant goodwill for the purposes of the passing off claim.

Timesource has since its foundation developed what has become a successful business in sales of watches. It evidently enjoys a strong reputation for good quality watches of attractive design and keen prices. Its main customers are wholesale distributors, multiple retailers and internet sales companies. The watches are marketed under three brand names: (1) “Ravel” which is the lowest priced range (2) “Freefall” which are sports watches and (3) HENLEY which is, of course, the brand in issue in this case and is the most successful line marketed by Timesource.

The HENLEY name was devised by Mr Woolley. He explained that he was trying to think of a brand name which was easy to pronounce, not evocative of any particular age or gender and had what he called “upscale connotations”. He came up with the name HENLEY, prompted by his knowledge of Henley-in-Arden in Warwickshire which Mr Woolley described as “a very middle class, respectable and typically ‘English’ market town”. It has evidently been a successful choice of name. The evidence is that since 2004 Timesource has sold around 1.2 million items under the HENLEY brand name.

HCL is essentially a clothing company, although it has in recent years expanded into the accessories market. There is no doubt that HCL has built up a substantial goodwill in relation to clothing. Its products are marketed under the name HENLEYS. The company was established by its Managing Director, Ben Luscombe, in 2000, but he had previously since 1996 been trading personally under the HENLEYS name. Apparently, the name of the company takes its provenance from the Oxfordshire town where Mr Luscombe grew up. The trading name HENLEYS, whilst not literally identical to the company name, is obviously derived from it. During the comparatively short period of HCL’s existence it has enjoyed notable growth. Its turnover peaked at about £41.5 million pounds in the year ended 31 March 2010, although it fell by about 50% in the following year and has continued to fall, by about half again, since then.

HENLEYS products were until recently sold by retail, through a subsidiary Henleys Retail Limited, at some 18 HENLEYS stores throughout the country. However, those stores have now been closed down with that company having been put into administration. HCL’s core business is, as it always has been, selling by wholesale. It sells to retailers, both independent and multiple shops, mail order companies and internet sales companies. It describes its target market as the 18 to 25 year old age group, predominantly male. The image which HCL cultivates for the HENLEYS brand was described before me as “a cool urban street wear brand”.

The First Defendant (“Ultimate”) is a company which imports and sells by wholesale a very wide variety of some 4,000 different products. However, it is involved in these proceedings because it has come, in the circumstances which I shall describe, to sell under licence from HCL watches and jewellery under the HENLEYS name.

I am entirely satisfied that both Timesource and HCL have established substantial goodwill in at least their respective core businesses of watches and clothing. The extent to which the goodwill extends beyond the respective core business was in dispute before me. As far as Timesource is concerned, it has under Mr Woolley’s direction built up a thriving business for HENLEY watches. It enjoys excellent relations with its trade customers and enjoys a fair amount of repeat custom for these watches. Timesource sells only in comparatively large amounts and accordingly does not sell by retail. Its best customers in terms of sales were given by Mr Woolley as JD Williams, Amazon, Jewellery World Ltd, DK Wholesale Ltd, Watt Bros Glasgow, Harvey and Thompson plc, Universal Trade, Clyde Importers, Worldwide Gifts, A2Z Wholesale and Time and Diamonds SA. HENLEY watches are made by Chinese manufacturers to Timesource designs with quartz movements provided by Seiko Industries in Japan or Singapore. Although the watches are relatively inexpensive and tend to sell by retail at well under £50, they evidently have a high reputation for quality. Returns of faulty watches by members of the public were said to be very low indeed; the cost to the company of returns runs at only about 1% of turnover.

In 2006 Ultimate was looking for a predominantly male fashion brand under whose name it could profitably market watches and, to a lesser extent, jewellery. It alighted upon HENLEYS clothing and approached HCL for a licence to use its HENLEYS brand name. HCL was interested in this proposition, and Ultimate was willing to offer a 12% royalty on net selling prices. However, the presence of Timesource with its HENLEY watches in the watch market came to be recognised by both Ultimate and HCL as presenting an obstacle.

Mr Woolley explained in evidence how one day in early 2007 he received a telephone call from Mr Clawley of Ultimate. He was known to Mr Woolley since he had previously worked for Peers Hardy UK Limited and, indeed, had once approached Mr Woolley for a job at Timesource. Mr Clawley told Mr Woolley that Ultimate had done a deal with HCL to market HENLEYS watches. However, he had been embarrassed to discover that HCL did not own a HENLEYS trademark for watches but that Mr Woolley did own the trademark HENLEY. Eventually, Mr Woolley agreed to grant Ultimate a licence for watches under his trademark for a royalty of 5% of net selling prices. At the same time HCL was prepared to reduce the royalty it was to receive from Ultimate down to 7% from the previously mooted figure of 12%. Thus, the net result made no difference to Ultimate in what it was to pay by way of royalty.

There was understandably a fair amount of argument devoted to the significance of the trademark licence arrangements. It is clear that Mr Woolley was prepared to tolerate competition from other watches with a virtually identical brand name provided that (a) there was sufficient financial compensation and (b) his licence incorporated certain safeguards. The written licence of 22 June 2007 records Mr Woolley granting to Ultimate a non-exclusive licence to use his registered trademark HENLEY for the 5% royalty. For present purposes it is material to note that (a) the licence was restricted to men’s watches only despite an earlier indication in Mr Woolley’s email to Mr Bird of 24 May 2007 that it was also to cover “Gents jewellery” (b) sales by Ultimate were to be confined to mail order companies and “regular” retail shops rather than discount retailers and wholesalers (c) Ultimate was only to use the mark in a manner which Mr Woolley was to approve and which was not confusing or misleading (d) publicity for Ultimate’s watches was subject to Mr Woolley’s approval and (e) all Ultimate’s customers had to be approved by Mr Woolley so as to avoid conflicts with Timesource sales. Along with the licence from Mr Woolley to Ultimate, HCL and Mr Luscombe also granted to Ultimate a licence for a royalty of 7% of net wholesale price. That licence was for both watches and jewellery. It covered a UK trade mark and CTM application for HENLEYS in respect of types of clothing and also unregistered marks for different representations incorporating the same word. The licence required use of a legend: “Made by Ultimate Products Limited in the United Kingdom under Licence from Henley’s Clothing Ltd. HENLEYS is the registered trade mark of the Licensor”.

The licence agreements having been concluded, the Timesource and Ultimate businesses appear to have co-existed without any major problem or dispute. The royalty was paid, and Mr Woolley made no complaint about erosion of Timesource’s market. It is fair to say that about 60% of Timesource’s business is ladies’ watches, a product not covered by Mr Woolley’s licence. Moreover, by far the largest customer for Ultimate’s HENLEYS watches has been Argos to which over 80% of Ultimate’s sales are made. Argos is not a Timesource customer.

There are in evidence many different illustrations of HENLEY and HENLEYS watches. In addition, I was shown examples of the physical watches. Timesource watches bear the word HENLEY on the dial of the watch; similarly, most of the Ultimate watches carry on the dial the word HENLEYS in, frequently, a script which is very similar to that used for HENLEY. It is true that Ultimate watches come in packaging which is different from that used by Timesource, but advertising material tends to display the watch itself rather than the packaging. Sometimes, Ultimate uses a different script for HENLEYS and various different logos such as fleur de lys, a winged lion or an expanded letter H. However, the force of that point is diminished by the fact that HCL has not cultivated a single distinctive motif or logo for itself. The evidence shows a number of different logos being used at different times. The logos tend to change, I was told, as the branding for HCL clothing changes from time to time. My overall impression was that the way in which the respective brand names HENLEY and HENLEYS are displayed on watches is often very similar.

I should now say something about jewellery and handbags, for the Claimants complain of HENLEYS being used in relation to these items as well as watches. Timesource not only sells HENLEY watches. Since 2004 it has marketed gift sets of watches with jewellery. These are comparable to other kinds of HENLEY gift sets like a watch and cuff link set or a watch and tie set. There are also HENLEY products such as bracelets incorporating a watch. It is to be noted, however, that it was not until August 2010 that Timesource began to sell HENLEY jewellery as stand alone items on their own (apart perhaps from some costume jewellery). Jewellery was sold under the HENLEYS name by Ultimate during the Autumn/Winter of 2009 and thereafter has been marketed by HCL.

As for handbags, Timesource has been selling these as part of gift sets with watches from 2006. However, as separate items HENLEY bags only went on sale from the end of February 2011. HCL has been selling HENLEYS bags, according to the evidence, since Autumn 2006. There was some dispute before me as to the precise dates when the marketing of bags began, but in my view nothing in this action turns on who started first by what was on any showing a short period of time. It is right to say that the examples which I was shown of HENLEYS bags were rather different in appearance from the HENLEY bags to which my attention was drawn.

The relationship between Timesource and Ultimate proceeded uneventfully after conclusion of the licence agreements. There were negotiations in 2008 directed towards the possibility of either HCL buying Mr Woolley’s CTM or Mr Woolley retaining the CTM but extending (and expanding) his licence. However, on 28 July 2009 without prior warning Ultimate wrote to Mr Woolley with 3 months’ notice to terminate the licence. It appears that HCL had come to the view that Mr Woolley’s licence was not needed, or at least that carrying on without paying for his licence would be a commercial risk worth taking. Shortly after the licence terminated on 31 October 2009 the present proceedings were instituted.

In principle, so-called “mere confusion” is insufficient to found a passing off action. A misrepresentation is required. Nevertheless, I should summarise the evidence before me which raised a question whether HENLEYS and HENLEY watches have been mistaken for each other. Unsurprisingly, there was a dearth of evidence of the public perception. There was, however, a certain amount of evidence about the position from a trade perspective.

The evidence was uniformly to the effect that HENLEY watches enjoy a high reputation. But Mr Yates of Timesource told me about two instances involving potentially important trade customers. There was an occasion in 2010 at a trade fair when a buyer from Next was evidently much impressed when looking at a range of HENLEY watches on the Timesource stand. She mentioned that she was much looking forward to her meeting with Timesource arranged for the following week. It turned out that in fact this was a meeting fixed with Ultimate in connection with HENLEYS watches. Mr Yates also told me about a large mail order customer, JD Williams. They stock HENLEYS watches and have also begun to sell HENLEY watches. However, JD Williams are reluctant to display HENLEY watches under that brand name. Indeed, there is an instance of JD Williams displaying a picture of a HENLEY watch in their catalogue with the name HENLEY on the watch dial airbrushed out. JD Williams are obviously concerned at the possibility of customer confusion. Indeed Victoria Coulthard, the watch and jewellery buyer of JD Williams, recently emailed Mr Yates in the following terms:

I also heard from some Timesource customers. Mr Frost, who owns both a wholesale and retail businesses, explained how he was a buyer of HENLEY watches in substantial amounts. There was much demand for these watches. Whilst he had been ignorant of the HCL clothing brand, he had heard customers in his shops mentioning HENLEY watches as being sold in Argos. Argos, in fact, sells HENLEYS but not HENLEY watches. Mr Watt owns Watt Brothers, a chain of Scottish department stores. He commented on the high quality of HENLEY watches unlike, in his view, many others in the fashion watch area. He recalled receiving an offer of watches from Ultimate which he thought were HENLEY watches. He queried this with Mr Woolley who explained that these were not HENLEY but HENLEYS watches. Mrs Lyons, a jewellery consultant, noticed what she thought were HENLEY watches in the Argos catalogue and visited the Timesource stand at a trade fair in order, as she thought, to discuss this range. Again, she was highly complimentary about the high standard of HENLEY watches. Finally, Mr Nevitt, a director of a large jewellery business with its own warehouse and online sales website, also praised HENLEY watches for their quality and explained how HENLEY is a recognised fashion watch brand with customers looking to buy HENLEY watches placing repeat orders. He mentioned how he had heard customers wondering if HENLEY and HENLEYS were the same brand. He also gave evidence about an occasion when he was approached by a gentleman called Raj who told him that he had a quantity of discounted HENLEY watches for sale. On closer questioning of Raj, Mr Nevitt established that he was not talking about HENLEY watches but what Raj explained as “genuine HENLEYS watches”.

In addition to the above, there was some exploration in the evidence of online selling. Whilst there is perhaps no absolutely precise pattern, online retailers like Amazon will against some searches display both HENLEY and HENLEYS watches indiscriminately and, on occasions, adjacent to each other. Indeed, HCL has paid for “Henley” as a Google Adword so as to come up with references to HENLEYS in case, it was explained, of spelling slips by online searchers. The scope for HENLEY and HENLEYS watches being mixed up in online searches is obviously considerable.

Lastly, I should mention references in the evidence to Trading Standards Officers having seized HENLEY watches in the mistaken belief that they were HENLEYS watches. This may have occurred in consequence of HCL using a brand protection agency to monitor counterfeit goods. There was also one fairly recent occasion recorded by HCL in its records of a member of the public, Clare Stote, emailing them on 12 March 2011 to enquire if she could buy a model of watch which she had had before and had liked. This was in fact a HENLEY watch, not a HENLEYS watch. It is right to say that, although this was the only example of something like this in the HCL records, I was told that all its earlier emails had been deleted. Accordingly, it is not possible to know whether this was an isolated incident.

There is little scope for argument about the law of passing off. The law was authoritatively reviewed by the House of Lords in the well known ‘Jif’ lemon case, Reckitt & Colman Products Ltd v Borden Inc and Ors [1990] RPC 341. In an often cited passage at page 406, Lord Oliver summarised the law as follows:

There was no dispute before me that I had to consider the tripartite elements of (1) goodwill (2) misrepresentation and (3) damage and very little dispute as to any other considerations of law. Given the licence agreement in this case, there was some debate as to the point of time at which I should assess passing off. It is well established that a claimant’s goodwill has to be viewed at the time when a defendant commences the acts complained of: Cadbury-Schweppes Pty Ltd v The Pub Squash Co Ltd [1981] RPC 429. Mr Malynicz for Mr Woolley and Timesource submitted that the appropriate time on the present facts was the expiry of the licence, since there could have been no complaint whilst the licence was operative. Mr Moody-Stuart for Ultimate and HCL, on the other hand, submitted that the appropriate time was when Ultimate began to sell watches since such selling was the subject of the complaint. It is a distinction which might have much greater significance on other facts. However, on the present facts, and whilst I incline towards accepting Mr Malynicz’s submission, I do not think it makes any real difference. Certainly, as far as watches are concerned, Timesource already had an appreciable goodwill when the licence was concluded.

The only other matter of law which I should expressly note was not in dispute before me. Whether or not there is a misrepresentation is ultimately a matter for me rather than any witness. In A.G. Spalding & Bros v A.W. Gamage Ltd (1915) 32 RPC 273 at 286-7 Lord Parker said:

Mr Malynicz drew my attention to the following passage in the judgment of Jacob J in Neutrogena Corporation and Anor v Golden Ltd and Anor [1996] RPC 473:

Mr Malynicz submitted that the present was a clear cut case. He laid much emphasis on the conclusion of the licence with Mr Woolley as demonstrating an acceptance by Ultimate and HCL that they needed Mr Woolley’s consent if they were to market HENLEYS watches. He did not go so far as to suggest that the licence gave rise to some estoppel, but it did shed light on the goodwill which HENLEY watches had established for themselves. Timesource undoubtedly had substantial goodwill in its HENLEY watches, as the extent of its sales under that brand name and the evidence of the trade witnesses established. He also submitted that the HENLEY name had acquired goodwill in the sales of jewellery and bags as well as in the sales of watches by the time when the licence expired in October 2009. The name HENLEY was “the attractive force which brings in custom”.

As for misrepresentation, Mr Malynicz invited me to note the virtual identity of the two brand names. In reality HENLEYS was the same as HENLEY, just as one might talk interchangeably of Sainsbury and Sainsbury’s or Marks and Spencer and Marks and Spencer’s. There was no material difference between the appearance of Timesource watches and Ultimate watches. They were both fashion watches. Whilst a small section of the younger market might know HENLEYS fashion clothing and be attracted to the watches because of their association with that designer brand, it was far from the case that the association of HENLEYS with clothing would be something known right across the watch buying public. Mr Malynicz invited me to take note of the evidence of confusion and submitted that it reinforced what in any event was inevitable with the identity of name and field of activity.

Mr Malynicz submitted that the following categories of damage arose on the present facts:-

Mr Moody-Stuart took issue under each of the three constituent elements of passing off. He acknowledged that HENLEY had a measure of goodwill in watches, although none at the relevant time in jewellery or bags. The possible acquisition of future goodwill was to be disregarded. However, he submitted that on the evidence the goodwill was limited to discount retailers and wholesalers. Moreover, he submitted that the HENLEY reputation was closely associated with Timesource and Mr Woolley, who had close personal relationships with their customers such that any query would immediately be resolved by personal inquiry. He relied on the reasoning in Teleworks Ltd v Telework Group plc [2002] RPC 27 in support of the proposition that any possible confusion would be immediately dispelled by a query to Mr Woolley. The licence to Ultimate from Mr Woolley had no relevance at all for it was a licence under the CTM rather than in passing off. Mr Moody-Stuart drew my attention to three key differences between trademark infringement and passing off. Unlike trademark infringement which only involves confusion between goods or services, passing off is asymmetrical in that a defendant’s goods must be represented as a claimant’s goods and not vice versa. Second, surrounding circumstances are all-important in passing off rather than a mere comparison between marks. Third, unlike a trademark, passing off confers no monopoly.

On analysis, Mr Moody-Stuart submitted, all the evidence of confusion (with the possible exception of that relating to Miss Stote) was the wrong way round in that it suggested a possible confusion that Timesource’s HENLEY watches were Ultimate’s HENLEYS watches. It was submitted that at its highest the evidence was of “mere confusion” rather than deception. Mr Moody-Stuart suggested that as a rule of thumb the critical difference between mere confusion and deception was that the latter was confusion causing damage. The present facts fell firmly within the former category. There was, Mr Moody-Stuart argued, no risk of deception in this case. All the evidence tended to show that any confusion within the trade was immediately clarified by Mr Woolley, and there was no evidence of public deception at all. The evidence relating to online searches was equivocal; in any event it needed to be treated with caution since so much depended on the precise search terms being used.

As for damage, there was no evidence of any damage at all having been suffered by Timesource. There was no evidence of loss of sales, and the evidence relating to Miss Stote was de minimis. Loss of licensing income was not a head of damage for the present type of case, and diminution in value of a brand, although theoretically possible in some cases, was divorced from reality on the present facts.

I shall summarise my conclusions under each of the three headings in turn, goodwill, misrepresentation and damage. Before doing so, however, it is right that I should give my assessment of the witnesses’ evidence. I considered that all the witnesses gave evidence candidly and credibly. Although Mr Moody-Stuart suggested that Mr Woolley was unduly guarded in what he had to say, I do not agree. He was in my view a thoughtful witness and someone who, understandably, was only prepared to agree with something with which to his own personal knowledge he could agree.

The trademark licence from Mr Woolley is in my view of limited significance to the issues which I have to decide. Whilst broadly allied, the causes of action for trademark infringement and for passing off are, of course, different, and they require the establishment of different facts. It may be said that Mr Woolley’s willingness to grant a licence and the absence of any notable harm to the Timesourcebusiness in consequence tend to demonstrate that the HENLEY and HENLEYS businesses can readily co-exist with each other. On the other hand, it also has to be acknowledged that Mr Woolley did require compensation in the form of the licence royalties and, notably, that the licence did incorporate a number of safeguards for the HENLEY business. With the termination of the licence, none of these safeguards apply. It must also be remembered that the licence only covered gentlemen’s watches whereas about 60% of HENLEY sales were of ladies’ watches. I therefore propose to consider the material facts for the purposes of the claim in passing off without regard to the previous existence of the trademark licence.

As I have already noted, I have no doubt that Timesource has established substantial goodwill in the sale of watches under the HENLEY name. Sales of HENLEY watches have grown considerably since the business began in 2004. It is obvious that Timesource has marketed a number of different styles and models of watch. But the trade witnesses spoke without dissent of the high reputation for quality and price which the HENLEY brand enjoys. Many repeat orders are placed and the range of outlets stocking the brand is considerable. It is fair to say that it was not really in dispute that the brand does enjoy substantial goodwill for watches. Mr Moody-Stuart sought to suggest that it was a goodwill restricted to traders rather than the public at large. But in my view no such clear cut distinction can realistically be made. It is true that there was no direct evidence of public perception, for example by way of survey evidence, but that is not uncommon in passing off cases. Where one is concerned with items like watches destined for ordinary consumers, I do not consider an absence of direct evidence from members of the public to be fatal.

Whilst I readily accept that Timesource has established a substantial goodwill in HENLEY watches, any discrete goodwill in HENLEY jewellery or bags is in my view minimal. Sales of jewellery or handbags as part of a set with a watch do extend back, but it is only fairly recently that Timesource has expanded its operations away from watches and started to market jewellery and bags on their own. In my view any reputation and goodwill in HENLEY jewellery or bags which Timesource currently enjoys is essentially parasitic upon the goodwill in the watches. It is the success in the sales of HENLEY watches which has led to the expansion into jewellery and bags. Of course, the position may change over time, but there was nothing in the evidence to suggest that HENLEY now has a separate reputation other than for watches.

It is true there is not much evidence of HENLEYS watches being mistaken for HENLEY watches, although there is a certain amount of evidence going in the other direction, i.e. a belief that HENLEY watches were associated with HCL or Ultimate. It is also true, as Mr Moody-Stuart emphasised, that there has been a number of occasions when any initial confusion has been quickly dispelled by a query of Mr Woolley. Nevertheless, I bear in mind that the question whether or not there is a misrepresentation is not a matter for witnesses to say.

In assessing the evidence I bear in mind, in particular, the following features. First, the brand names in issue are virtually the same. I agree with Mr Malynicz that the addition of the letter “S”, whether by way of possessive or plural, is of little or no significance. Second, I bear in mind that the way the respective brand names are overtly presented on the dials of watches is very similar; frequently, a similar typeface is used. As is evident from the catalogues and other publicity material in evidence, promotion of watches tends to concentrate on the appearance of the product itself and the dial. Third, the way the respective watches are marketed to the public, the approximate retail selling prices and the outlets through which they are sold substantially overlap. Both HENLEY and HENLEYS watches are marketed as “fashion” watches and are promoted in the similar section of catalogues for their respective public sales outlets. Both brands of watch are far from being conventional unadorned watches of the sort sold by several well known Swiss manufacturers. Whilst the evidence is that HENLEYS watches tend to retail at slightly more than HENLEY watches, both brands occupy a similar place in the market in terms of price. Finally, it has to be said that, although over 80% of HENLEYS watch sales are apparently made through Argos, both brands tend to be sold in the same sort of outlets such as store chains or online sellers like Amazon.

Much of the Ultimate and HCL evidence was directed towards establishing that HENLEYS has goodwill and is well known as a leading fashion brand, particularly for the 18 to 25 year old age group. I accept that this is so. There is no doubt that, despite recent setbacks, HENLEYS has achieved a high turnover in what has been a relatively short period of time. There is also no doubt that HCL has established considerable goodwill under its HENLEYS name in the clothing market. Flowing from this, it was suggested by Mr Moody-Stuart that buyers of HENLEYS watches would make their purchases because of an association with the clothing brand rather than any association with HENLEY. Doubtless, some more youthful buyers of a HENLEYS watch would be attracted because of that brand’s “cool urban street wear” image. But I cannot accept that the HENLEYS clothing brand will be known to buyers of watches generally. Nor can I accept that purchasers will buy without regard to the reputation of the watches themselves and are simply interested in external associations.

I have come to the conclusion, notably in light of the factors to which I referred in paragraph 38 above, that sales of watches under the brand name HENLEYS engenders the belief that the watches are, or are associated with, HENLEY watches. This is apparently what Miss Stote thought, and I can well understand that. Of course, I emphasise that there is no question here of any deliberate deception of the public. But that is not in issue. The question is whether or not there is a misrepresentation, and in my view there is.

Whilst there is a misrepresentation in relation to watches, different considerations apply in the case of jewellery and bags. I do not accept that someone who sees a HENLEYS piece of jewellery or bag is going to associate it with a HENLEY watch or any other items associated with HENLEY watches. Evidently, Timesource would wish to expand its business and goodwill beyond the sale of watches. But, whatever may happen in the future, I have no doubt that there has been in this case no deception in relation to jewellery or bags.

There is no evidence of any actual damage. This is perhaps unsurprising, particularly in view of the existence of the licence until shortly before these proceedings were commenced. Nevertheless, having found a misrepresentation, I accept Mr Malynicz’s argument that damage would be likely to ensue even though I do not think it is likely to be great. In the circumstances of this case there is likely to be a loss of sales of HENLEY watches. Moreover, I do note the difficulties which Timesource has had with its JD Williams sales in consequence of that company also stocking HENLEYS watches. Timesource’s business has been damaged with Timesource being precluded from selling under its own brand name. As for the claimed loss of royalty income, I do not regard that as recoverable on the facts of this case. It does not flow from the misrepresentation. Nor do I regard this as a case where Timesource can complain of dilution of the HENLEY brand. I agree with Mr Moody-Stuart that such a claim is unreal on the present facts. Mr Malynicz also mentioned in opening that there may be damage in that the HENLEY reputation could be affected by the way HCL carried on business. However, he did not rely on this argument in his closing submissions. I therefore simply record that I regard it as a merely theoretical head of damage which does not have any sound basis on the present facts.

In the result I find that there has been passing off in relation to watches. However, I dismiss the passing off claim insofar as it concerns jewellery and bags rather than watches. Unless the Order consequential upon my judgment can be agreed, I will hear the parties on any consequential matters.