NOTES OF CASES
| DOI | http://doi.org/10.1111/j.1468-2230.1981.tb02463.x |
| Published date | 01 September 1981 |
| Date | 01 September 1981 |
NOTES
OF
CASES
PASSING
OFF
AND
UNFAIR
COMPETITION:
AN
OPPORTUNITY
MISSED
MANY
advertising campaigns promise much but deliver little: such
was the situation in the long-heralded decision in
Cadbury
Schweppes Ply. Ltd.
v.
Pub
Squash
Pty. Ltd.’
In
1974
the plaintiffs
wanted to increase their share of the market in soft drinks in
Australia and decided to develop a new lemon
squash,
called
“
Solo
”,
to compete with Coca-Cola. The drink was sold
in
cans of a distinc-
tive colour and appearance and it was promoted by an intensive
national television and radio advertising campaign emphasising
Solo
as a drink associated with rugged masculine endeavour and evoking
memories of the sort of squash pubs used to make in the past. The
expensive advertising campaign was remarkably successful. In
1975
the defendants launched a similar product, called
“
Pub Squash
”,
which was sold in cans of the same type and colour as Solo. They
significantly cut into the plaintiffs’ market, reducing their sales
by
15
per cent. in
1976.
The plaintiffs launched proceedings for
passing off and later added a claim in respect
of
unfair trading.
The trial judge
in
the Supreme Court of New South Wales found
that the defendants
‘‘
set out in a deliberate and calculated fashion
”
to take advantage of the plaintiffs’ successful promotional cam-
paign; they sought to copy or approximate the formula for Solo
and chose the name Pub Squash and packaging with the intention
of
benefiting from the plaintiffs’ past and anticipated advertising
campaign.
The traditional test of passing off turns upon two interrelated
factors: the
distinctiveness
of the plaintiffs’ name or mark which
encourages the public to trade with him and
so
provide a business
goodwill; and the
confusion
or
deception
of the defendant’s activi-
ties, which misrepresentation causes or
is
likely to cause damage to
the plaintiff.
The plaintiffs’ claim relating to the get up
of
the cans of Pub
Squash failed: although the copying of the get up was deliberate,
the defendants had sufficiently differentiated its product and
so
had
avoided any deception or misrepresentation.
“
The court must be
on its guard against finding fraud
merely
because there has been
an imitation of another’s goods, get-up, method of trading or trading
style.”
The second claim raised the question whether the deliberate
adoption by the defendants
of
the plaintiffs’ advertising campaign
(the theft of an advertising benefit) could amount
to
the tort of
passing off. In principle the Privy Council was happy to see the tort
of passing off, recently modernised and reformulated in Warnink
1
[1981]
1
All
E.R.
213.
2
Ibid.
at
p.
221.
564
September
19811
NOTES
OF
CASES
565
v.
TownendY3
extend beyond the name or trade mark of a product
or business
“
to encompass other descriptive material, such as
slogans or visual images which radio, television or newspaper
advertising campaigns can lead the market to associate with a
plaintiff’s product, provided always that such descriptive material
has become part of the goodwill of the product
[sic].”
Even though
passing
off
applied to an advertising campaign in principle, it was
still necessary for the plaintiffs to show distinctiveness and mis-
representation, and they failed
on
both counts. Sometimes words
or
material can be too descriptive and
so
preclude distinctiveness. The
trial judge found that the advertising themes were essentially des-
criptive of the .type of product advertised but did not serve to
identify,
or
denote the origin of, the product being advertised:
they were descriptive of the product but they never became a
distinguishing feature. Lord Scarman emphasised the necessity to
bear in mind in this branch of the law
“the balance to be maintained between the protection of a
plaintiff‘s investment in his product and the protection of free
competition. It is only
if
a plaintiff can establish that a defendant
has invaded his
‘
intangible property right
’
in his product by
misappropriating descriptions which have become recognised by
the market as distinctive of the product that the law will permit
competition to be restricted. Any other approach would
encourage monopoly. The new, small man would increasingly
find his entry into an existing market obstructed by the large
traders already well known as operating in
it.”
There was also a finding of fact against any relevant misrepre-
sentation, deception
or
probability of deception by the defendants
concerning the plaintiffs’ advertising campaign.
In terms
of
passing
off
the decision of the Privy Council may
seem disappointing following
so
closely upon the existing decision
in
Warnink
v.
Townend
where the defendants were held liable for
falsely describing and selling their egg flip as Advocaat to the
detriment of all those who traded in genuine Advocaat. That
case contained ringing policy declarations. Thus, Lord Diplock
observed that the issue of extending the tort of passing
off
was
“
essentially one of legal policy.” Passing
off
was extended because
the facts in that case disclosed
“
a case of unfair, not to say dis-
honest, trading of
a
kind for which a rational system of law
ought to provide a remedy to other traders whose business or
goodwill is injured by it.” Similarly, Lord Fraser took a broad
policy approach:
“
Business morality seems to require that they
should be entitled to protect their goodwill. The name of the tort
committed by the party making the misrepresentation is not im-
portant.” Nevertheless, in spite
of
the modernisation of
“
the
3
[I9791
A.C. 731.
See
Russell
(1980)
43
M.L.R.
336.
4
[1981]
1
All
E.R.
213, 223.
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