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TMI Blog1979 (10) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... , using, selling or offering for sale their goods under to mark 'ELLORA'. The defendants by their reply dated January 9, 1963, assured the plaintiffs that they were newcomers in the industry and did not want to quarrel over a name. They said they were prepared to stop using the name 'Ellora' and had chosen a new name for their time-pieces. (4) But the defendants continued using business name Ellora Industries . The plaintiffs again called upon the defendants to desist from infringing their trade mark 'Elora' by using the same as part of their trading style. Some correspondence was exchanged but the defendants did not give up their trading name. (5) The defendants having refused to discontinue the use of the word 'Ellora' in their business name, the plaintiffs on December 2, 1964 commenced an action in the court of the district judge to restrain them. Two allegations were made in the suit. Firstly, that the use of the trade mark 'Elora' as the key portion of the trading style Ellora Industries was an infringement of the registered trade mark 'Elora' which was exclusive property of the plaintiffs, and secondly, that the use of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lora Industries under which they manufacture time-pieces is not denied. The word 'Ellora' is used conspicuously by them in advertisements etc. as part of their business name. (10) On the evidence produced, by the plaintiffs the learned judge came to the conclusion that the infringement of the trade mark is established. On the question of passing off he was of the view that the plaintiffs were not able to substantiate their case. (11) In the appeal and cross-objections three questions arise for decision. These are : 1. Passing off; II. Infringement of trade mark; and III. Enquiry into accounts of profits. (12) 1. PASSING-OFF:The purpose of this tort is to protect commercial goodwill; to ensure that people's business reputations are not exploited. Since business goodwill is an asset, and therefore species of property, the law protects it against encroachment as such. The tort is based on economic policy, the need to encourage enterprise and to ensure commercial stability. It secures a reasonable area of monopoly to traders. It is thus complimentary to trade mark law which is founded upon statute rather than common law. But there is a difference between stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out themselves which is calculated to mislead. The law on this matter is designed to protect traders against that form of unfair competition which consists in acquiring for oneself, by means of false or misleading devices, the benefit of the reputation already achieved by rival traders. (Law of torts 17th ed. p. 401). WINFIELDsays : THElaw of passing off arose to prevent unfair trading and protects the property rights of a trader in his good will... (tort 9th ed. p. 485). (15) The basic question in this tort turns upon whether the defendant's conduct is such as to tend to mislead the public to believe that the defendant's business is the plaintiff's or to cause confusion between the business activities of the two. Whether such a tendency to mislead or confuse is established can only be decided by consideration of all the circumstances. (16) Because the protection given is not for his reputation in general, but to the plaintiff's business goodwill, it must be established that the defendant's activities are likely to compete with the plaintiff's. Where the parties are engaged in common or overlapping field of activity the competition will take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase was not approved of in Australia : Flemings says: TOdemand a 'common field of activity' would not only be incompatible with the growing trend towards diversification in business, but also foist an unwarranted limitation on a tort based simply on the prejudice to goodwill from practices that are actually calculated to confuse. (FLEMINGThe Law of torts 5th ed. p. 702-703). (20) On the question whether there can be passing off if the fields of activity are different, opinions differ. But everybody is agreed that if the line of business is same or allied there is an immense potential for confusion, deception and temporal harm. The test of common field of activity comes handy. Both parties are in the same trade. The plaintiffs sell clocks. The defendants sell time-pieces. And a time-piece is a portable clock, after all. (21) Another reason for injuncting the defendants in their use of the word 'Ellora' in business name is that the plaintiffs in their evidence said they wanted to introduce time-pieces. In ( Kodak for cycles), one reason given for protection was that the plaintiff company might want subsequently to extend their business into the defendan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Bollinger v. Costa Brava Wine Co. Ltd. is a most forward looking case in recent times where Danckwerts J. expanded the tort to protect misappropriation of business values. The champagne producers of France sought an injunction to prevent the defendants from marketing their sparkling wine under the name Spanish Champagne . Danckwerts J. granted an injunction. Such a description as Spanish Champagne could not be expected to deceive the connoisseurs or lovers of wine but it was found that there were many potential customers who were much vague about what champagne was, some knowing it only as the wine with the great reputation . What they would want was the real thing without knowing whether that meant the produce of a particular trade source or one having particular qualities. Champagne properly means French Champagne, which is associated with being drunk at the gayest parties and in distinguished circles and it was. therefore, wrong for the defendant to market his produce under the name Spanish Champagne . (25) The case related to the protection of a reputation which the word Champagne suggested. It is a word that was valuable to a group of traders to preserve. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngers, but that it puts a weapon calculated to be fraudulently used by the middlemen into their hands, by which they may, intentionally or not, deceive the ultimate purchasers. The dealers may not themselves be deceived but they can certainly use the instrument of deception to create confusion in the trade or to mislead the purchasers. The representation need not deceive immediate purchasers ; the test is the likely impact on those members of the public who ultimately become purchasers. (30) There is a misrepresentation for business purpose as to the origin of goods which the defendants manufacture in the course of their business. This is passing off. The defendants have no right to represent their business as the business of the plaintiffs. (31) Lord Halsbury defined the tort of passing off in Reddaway v. Benham, 1896 A.C. 199(13). He said that the defendant shall not represent his goods or his business as the goods or business of the plaintiff. How do we apply this principle here ? The plaintiffs do not manufacture time-pieces though they are registered for them. This is an admitted case. How it is not always necessary that there must be in existence goods of that other m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is an untrue representation. The plaintiffs' complaint in substance is that the supposition that the defendants are connected with the plaintiffs will injure the reputation of the plaintiffs in a way calculated to cause them financial loss. The purchasers are likely to think that the time-pieces come from the same source or through the same channel as docks and wrist watches. The purchasers are likely to be misled in thinking that the defendants' firm has an intimate connection with the plaintiffs or that the defendants' business is a branch of the plaintiffs or somehow mixed up with the plaintiffs' business. Even any connection with the plaintiffs is misrepresentation sufficient to constitute the tort. (See Harrods Ltd., (supra),. The present case is an illustration of business misrepresentation and unfair trading , to use an expression of Danckwerts J. (35) A typical commercial situation of business misrepresentation is neatly illustrated by Dwarkadas v. Lalchand, Air 1932 Sind 222 (25), where it was held that the defendant represented his business as that of the plaintiff. (36) On passing off my conclusion is that the use of the word 'Ellora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a property right in the plaintiff which has been infringed. In this case the trade mark is registered for time-pieces also. It is a dear case of infringement. (41) The exclusive right is given by s. 28 of the Act. S. 29 is an appendage to s. 28, its function being to widen the definition of infringement. The expression 'use of a mark in relation to goods' is defined in s. 2(2)(b). It includes the following types of cases: (1) use of the mark upon the goods, (2) use of the mark in other physical relation to the goods, such as, use on a container, tin or wrapper or ticket attached to the goods. (42) The defendants have caused a part of the plaintiffs reputation to be filched. They have annexed to their business name what is another men's property. The plaintiffs' trade mark 'Elora' is the core or the essential part of the defendants' trading style, Ellora Industries . (43) One of the most common ways of unfair appropriation of the plaintiff's goodwill is by the imitation of the plaintiff's trade mark to such an extent that the public is deceived thereby. The interest in the exclusive right and use of trade marks is recognised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaintiffs have not so far manufactured time-pieces. They have confined themselves to clocks and wrist watches. (49) Secondly, the defendants' time-pieces are manufactured under the mark 'Gurgon' which is distinctly and conspicuously printed on the dial as well as the carton. (50) Thirdly, the courts order an account of profits on the theory that the defendant was constructively an agent of the plaintiff in disposing of goods in a manner infringing the plaintiff's rights [Snell Principles of Equity (24th ed. 1954) p. 574]. The principle upon which the court grants an account of profits is that where one party owes a duty to another, the person to whom the duty is owed is entitled to recover from the other party every benefit which that other party has received by virtue of his fiduciary position if in fact he has obtained it without the knowledge or consent of the party to whom he owed the duty (Kerly Law of Trade Marks 10th ed. p. 344). This principle does not apply here because the plaintiffs were not manufacturing time-pieces. (51) Fourthly, there is no reasonable prospect that the inquiry would reach a positive result. Kerly says that account of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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