Mr Recorder Iain Purvis QC:
Introduction
- This is the trial of an action for passing off concerning what has been referred to in these proceedings as 'the fox and boot device'. A representation of that device is set out below:
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- I have shown the fox and boot device in the manner most commonly used today by the Claimant. It should be pointed out for complete accuracy that the precise representation of that device by the Claimant has not been perfectly consistent over the years and is indeed not perfectly consistent today. Small variations in the appearance of both the boot and the fox can be seen in some of the advertising materials in the evidence, and can still be seen between different examples of products presently on sale. However, nothing turns on this.
- The Claimant, W.S. Foster & Son Limited, is a long established shoe and bootmaker, with premises in Jermyn Street. The business dates back to the 1840s. The Claimant is well known amongst those who purchase custom-made (or 'bespoke') shoes for the skill of its craftsmen, and such shoes sell for up to £3,000 a pair. However, it also has other aspects to its business, selling ready-to-wear shoes and other leather products such as cases, luggage and wallets.
- The Defendant is an ultimate subsidiary of Brooks Brothers Group, Inc., the parent company of the well-known menswear group which started business from Madison Avenue, New York, and has since expanded across the United States and across the world. It also sells shoes of the ready-to-wear variety. The Defendant itself was incorporated only in 2005, and started to trade from two new stores in London in 2005 and 2006. It has since opened another store in Edinburgh. Various Brooks Brothers companies have come into existence at different times in the long period covered by the evidence in this case, but it is not entirely clear which company did what at any particular time. In this judgment I will use the term 'Brooks Brothers' generically to refer to the various companies in the group.
- The Claimant was represented at trial by Mr Tom Alkin and the Defendant by Mr Christopher Aikens.
History of the fox and boot device
- Some background on the history of the fox and boot device is necessary before considering the pleaded cause of action in this case. Most of it comes from the evidence of Mr Terry Moore, who gave evidence for the Claimant, and Mr Raymond Jones, who gave evidence for the Defendant. Both were able to speak of events (though from different perspectives) from about 1950.
- The device was originally conceived and used by a shoe maker called Bartley & Son, probably dating back to the 19th century. In 1952, when the last Mr Bartley chose to retire, the business and equipment of his firm was acquired by a large and well-known shoe maker called Peal & Co ('Peals'). Peals were based in Oxford Street (and later Wigmore Street) but had manufacturing premises in Acton. They were bootmakers by appointment to various members of the royal family and created bespoke shoes for many notable celebrities of the last century including Winston Churchill, Lord Mountbatten and Fred Astaire. Peals had been run by successive generations of the Peal family since 1791.
- Having acquired the business of Bartley & Son, Peals adopted the fox and boot device for its own business, branding its shoes and other goods with the device. Given the size and significance of Peals in shoe making at the time, it is clear that by 1965 the device was well-known as its trade mark. Peals seem to have used the trade mark in the following way:
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- Peals made both bespoke and ready-to-wear shoes, but the bespoke trade was by far the largest part of its business. Many of its bespoke shoes were supplied to customers in the United States. From around 1930 it would appear that they supplied Brooks Brothers with ready-to-wear shoes. Though I have seen no copy of any actual agreement, it is suggested by the witnesses for the Defendant that this was an exclusive arrangement under which Brooks Brothers were the sole supplier of Peals' ready-to-wear footwear in the United States. This seems likely since it is common ground that these shoes were supplied bearing the fox and boot device, the name 'Peal & Co. Ltd' and the words 'made in England for Brooks Brothers', in the following form:
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- The Brooks Brothers group included a company registered in the United Kingdom called Brooks Brothers (New York) Limited. This company was based in Regent Street, London, and was responsible for sourcing manufactured goods from traditional makers in Europe. Mr Raymond Jones worked for that company from 1951 and was responsible in particular for the Peals account.
- In the early 1950s Peals started to run into difficulties. Both Mr Jones and Mr Moore put those difficulties down to the impossibility of finding good young staff prepared to learn the trade of bespoke shoemaking, which Mr Moore describes as 'unglamorous, physically hard and repetitive'. As a result, Peals started to outsource the manufacture of their ready-to-wear shoes (including the shoes shipped to Brooks Brothers) to another company called Edward Green & Co. These shoes continued to be branded with the fox and boot device and the Peal & Co. name. The shoes destined for Brooks Brothers seem to have been shipped direct to the United States by Edward Green & Co.
- By the end of 1964, things had reached a stage where Peals simply could not carry on trading. The directors announced to the staff of the company that the business was closing down. There is no evidence of what formal steps were taken to liquidate the company, but it appears on the face of it to have been a voluntary process. Certainly, there is no indication of the appointment of a liquidator or of the taking of any steps to preserve or maximise the return from the assets of the company. Mr Moore's evidence is that the company employees emptied the contents of the Wigmore Street shop into a van and took it to the factory in Acton to be burnt. The employees were told that they were free to salvage what might be useful to them in their future employment. As a result, many of the last makers such as Mr Moore retained their lasts, their benches and knives, and their customer lists so they could continue to supply shoes to the bespoke customers of Peals.
- The only contemporary document evidencing the termination of the business of Peals is an article from the Associated Press agency dated 3 January 1965. This reads as follows:
'Custom Bootmaker in London Calls it Quits
London's most famous bootmakers are closing down because of trouble getting craftsmen to make their custom-made shoes. Rodney Peal, director and secretary of the 173-year-old Peal & Co. said Thursday the firm would close its custom operation Feb 27. 'The new workmen haven't got the skill of the old craftsmen and work recently has not been up to standard' said Peal, a member of the sixth generation to operate the firm…Peal said most of his 82 employees had already found work in the 10 or so custom bootmakers left in London…The firm stopped taking orders three weeks ago… 'I'm very disappointed at the closing' said Rodney. 'I thought I was in this field for life.' He said he hadn't decided what he would do now. Peal's readymade shoes, produced from the firm's lasts and special leather at factory in Northampton, will still be sold in the United States by Brooks Brothers of New York. But the custom-made shoes will be no more, and all the British sales will end.'
This report was described in the course of argument by counsel for the Claimant as a 'press release'. This does not seem to be entirely correct – the wording of the report suggests an interview of some kind – but there is no reason to believe that the report does anything other than accurately reflect the intentions of those controlling Peals at the time, or the general manner in which those intentions were being expressed to the public in the United Kingdom.
- Immediately before the date of this report, Peals had entered into an agreement of sale ('the Agreement') dated 31 December 1964 with Brooks Brothers (New York) Limited. In consideration of the sum of £3,000 Peal & Co. Limited ('the Vendor') agreed to sell free from all charges and encumbrances:
'a. The goodwill of the business together with the exclusive right so far as the Vendor can grant the same to use the name of Peal & Co. or any variant thereof in any part of the world and together with all the Vendor's right title and interest in and to the unregistered trade mark a copy of which is attached hereto [attached was a copy of the device used on the Brooks Brothers shoes]
b. All lists of the Vendor's customers who are either current or who might be reasonably expected to continue as customers of the Vendor
c All lasts patterns and dies used or useful in the business of the Vendor'
- The Agreement stated in clause 3 that the purchase shall be completed on 1 January 1965 when the sum of £3,000 was paid, when assignments of the goodwill and the trade mark were executed and delivered in such form as the Purchaser shall reasonably require and the items set out in b and c were delivered to the order of the purchaser.
- In clauses 4 and 5 the Agreement stated as follows:
'4 The Vendor shall at the close of business on 31 December 1964 cease to carry on the business so far as it relates to the United States of America and Canada and thereafter shall on or before 28 February 1965 cease to carry on the business elsewhere
5 After 1 January 1965 and 28 February 1965 respectively the Vendor will not [there then appears to be some text missing in the exhibit] corporation in manufacturing or selling boots shoes or leather goods of any kind and will not thereafter solicit orders or seek to obtain business or permit its name or the said trademark to be used for any such purpose by any person firm or corporation except that until 28 February 1965 it may carry on its business in the United Kingdom to the extent and in a manner that shall ensure the most profitable termination of its business in the United Kingdom.'
- Technically, this is merely an agreement to assign, and there is no evidence that the actual assignment of the goodwill or the sale of the other assets were completed in accordance with clause 3. Indeed, it could be said that Mr Moore's evidence about the dissipation of the lasts and the customer lists is somewhat inconsistent with compliance with the sale of the assets in clause 1b and c. However, on the balance of probabilities, it would seem unlikely that completion did not in fact take place, given the terms of the Associated Press article. I would have expected the Peals to be keen to get their hands on the sum of £3,000 in all the circumstances. Ultimately Mr Alkin seemed to be prepared to accept for the purpose of this action that Brooks Brothers (New York) Limited had in fact acquired by assignment the goodwill and other rights referred to in clause 1a as of 1 January 1965.
- As I have explained, by 1964 the manufacture of the ready-to-wear shoes which were being sold by Brooks Brothers in the United States under the trade mark comprising the words Peal & Co. and the fox and boot device had already been sub-contracted to Edward Green & Co. This meant that the demise of Peals caused no disruption to supplies as far as Brooks Brothers were concerned. So far as the public in the United States was concerned, nothing changed either. They could still buy the same shoes, bearing the same trade marks, from Brooks Brothers stores. For the record, the manufacture was taken over in 1989 by another company, Crockett & Jones, and still later other manufacturers were used.
- Back in the United Kingdom, Peals' rivals in the manufacture of high quality footwear had, to use a well-known phrase of the time, 'never had it so good'. The demise of the dominant company in the field increased the demand for their shoes, and they were able to employ many of the skilled craftsmen who had previously worked for Peals. This included Mr Moore, who went to work for the Claimant, Foster & Son.
Adoption of the fox and boot device by the Claimant
- The Claimant seems to have decided to exploit Mr Moore's previous association with Peals for its own benefit. Mr Moore was sent on marketing tours of the United States, describing himself in literature as 'formerly of Peal & Co.'. More significantly for the purposes of this case, the Claimant also decided (apparently at Mr Moore's suggestion) to adopt Peals' fox and boot device as its own logo.
- Mr Moore's evidence was that he made this suggestion because Peals had a good business in bespoke riding boots supplied to customers in a particular region of Virginia. Mr Moore had retained the customer lists for that area, and considered that it would be a good sign for that market. In cross-examination he was asked by Mr Aikens about the reasons for that decision:
Q So you thought that this was a good logo to use because people would recognise the boot as a riding boot, correct?
A Yes
Q They would associate the fox with fox hunting?
A Yes.
Q Just out of interest, Mr Moore, why did you not also suggest using the Peal & Co. name?
A It did not belong to Fosters
Q But the fox and boot mark did?
A It was just a sign, you know, of what you can do.
Q And it was helpful because it was a boot and it referred to hunting and that is what you wanted to communicate?
A Exactly.
- Ultimately, the precise reasons for the adoption of the fox and boot device by the Claimant may not matter. However, the idea that it was adopted simply because it showed that they could make hunting boots is to my mind most unlikely. First of all, of course, hunting boots were only a small part of the business of Foster & Son. Secondly, the fox and boot device was well known as the trade mark of the most famous bespoke shoemaker in the UK, recently demised. It is quite clear that the Claimant wished to take advantage of any perceived connection with Peals, as illustrated by the prominence given to Mr Moore's historical association with the company in trade literature (even as late as 1969). I therefore consider that Foster & Co.'s original decision to adopt the device for their own use was made for the purpose of suggesting to the public that they were the true heirs of Peals in terms both of personnel and of the quality of their products.
- The Claimant has continued to trade as a specialist shoe and boot maker, producing both bespoke and ready-to-wear shoes, until the present day. It moved to premises in Jermyn Street in 1966 and is still there. It has clearly experienced some financial troubles in recent times, but was taken over by Mr Richard Edgecliffe-Johnson (formerly of Citigroup) as Chairman in 2006. Mr Edgecliffe-Johnson has taken steps to modernise and expand the business. It plainly has a very high reputation in the world of quality footwear and other leather products.
- From 1965 to the present day, the Claimant has consistently used the fox and boot device in at least the following ways:
(a) On all of the thousands of pairs of shoes and boots sold by the company, imprinted on the inner sole;
(b) On the majority of other leather goods sold;
(c) On shoe bags and carrier bags;
(d) On reminder cards, envelopes, letterheads and stationery;
(e) On all the 100-150,000 invoices or deposit dockets issued since 1966;
(f) On the sign hung outside the shop in Jermyn Street.
- It is worth pointing out at this stage that the fox and boot device has ordinarily been presented to the public by the Claimant in conjunction with the name 'Foster & Son'. However, there has been no consistent way in which the marks have been combined. Sometimes the fox and boot device is on top, with Foster & Son underneath. Sometimes, Foster & Son is written in an arc shape over the top of the fox and boot device. Sometimes, the fox and boot device appears on its own with Foster & Son off to the side. In the case of the Jermyn Street shop it seems that for many years the fox and boot device was the only trade mark appearing on the hanging sign.
- Evidence from the industry as to the significance of the fox and boot device was given for the Claimant by Mr Jeremy Hackett of the well-known menswear company. He considered that the device was distinctive and instantly recognisable to him as the logo of Foster & Son, quite independently of the name. Sir John Mitting, a High Court Judge, and a customer of the Claimant, also gave evidence for the Claimant. He has been a customer of Mr Moore at Foster & Son for 25 years. He considered that a discerning buyer of English shoes and leather goods would associate the fox and boot device with Foster & Son.
- Neither of these witnesses was cross-examined. Issue was taken by Mr Aikens with the admissibility of their evidence on the basis of the lines of authority that (i) expert trade evidence is not admissible in passing off cases save where the nature of the trade raises special issues with which the Court could not be expected to be familiar from its own general knowledge and experience; (ii) evidence from an individual customer as to the state of mind of customers generally is inadmissible opinion. He also pointed out that there was no direction permitting expert evidence to be given in this case.
- In the end, it is not necessary to resolve the debate about the admissibility of the evidence of Mr Hackett and Sir John Mitting. The views of both witnesses are, I believe, entirely consistent with the conclusion which I would in any event have drawn from the objective and unchallenged evidence as to the substantial use of the fox and boot device by the Claimant since 1965. That conclusion is that the fox and boot logo is highly distinctive and is recognised by purchasers of hand-made and high quality shoes and leather goods in the United Kingdom as indicating products of the Claimant.
The Defendants' activities complained of
- The matters of which the Claimant complains date back as far as 2005. In November of that year, the Defendant opened its first store in the UK (in the City of London) and started to sell items which included the ready-to-wear shoes branded with the same device which had appeared previously on the shoes sold through Brooks Brothers in the United States:
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At or about the same time the Defendant started to sell the same branded shoes to the public through a website at www.brooksbrothers.co/uk.
The commencement of this action
- The presence of these shoes on the market in the UK seems to have passed unnoticed by the Claimant until Mr Edgecliffe-Johnson visited the Defendant's Regent Street store in December 2007. He noticed a prominent display of Peal & Co. branded merchandise including shoes, cases and leather goods bearing the Defendant's device. He visited the store again the same month to take some photographs which show a poster of some shoes bearing the device and a briefcase also bearing the device.
- Despite this discovery, the Claimant did not complain to the Defendant until 28 August 2008 when its solicitors sent a brief letter to the Regent Street Store. This claimed that Foster & Co. were the 'proprietor of Community Trade Mark 5234208' for the fox and boot device and attached a copy of that trade mark. The letter went on to state that their client had 'recently become aware that you are using a device which is substantially similar to their trade mark and they are obviously concerned that this will lead customers to be confused as to the origin of your goods'. It invited the recipient's comments.
- In fact, the Community Trade Mark was only at application stage at this time since it had been opposed by a company called John Lobb, which has a trade mark of its own for a device of a riding boot. It was only granted on 15 June 2009. Correspondence between the parties followed in which the Defendant raised the matters upon which it relies by way of defence in these proceedings. It is fair to say that the Claimant took a very relaxed approach at this stage, on occasion not responding to correspondence for many months at a time. This was explored to some extent in the cross-examination of Mr Edgecliffe-Johnson. His explanation, in summary, was that he was very busy trying to revive the company and it was a matter of priorities. After September 2011, he was even less concerned because he paid a further visit to Brooks Brothers and concluded from the absence of point of sale material and the small number of products on display that they were discontinuing the brand. Nonetheless, on 12 March 2012 the Claimant finally issued proceedings for infringement of the CTM and for passing off.
- Mr Aikens sought to rely on the pre-action course of conduct of the Claimant for two purposes. First he relied on the fact that the original letter before action did not mention passing off, but only the CTM. He suggested that one could infer from this that the Claimant had no genuine belief that the Defendant's activities amounted to passing off. I do not agree. Although the letter does not mention passing off by name, the terminology is entirely general and does assert a belief that the use of the Defendant's device will lead customers to be confused as to the origin of their goods. This is the essence of the tort of passing off. Secondly he relied on the delays before proceedings were issued as indicating a general lack of concern inconsistent with the Claimant's case that there was real damage to their goodwill. Once again, I do not think that one can draw that conclusion. The Claimant is a small business struggling through difficult economic times. The taking of legal proceedings is a serious and expensive step to take. Until 2009 the Claimant was engaged in opposition proceedings over the CTM and from May 2011 it was being sued in the United States by Brooks Brothers over its use of the fox and boot device there. Furthermore, the actual level of trade by the Defendant in the UK under its device was relatively small at all times up to the issue of these proceedings (just over £20,000 per annum).
The Community Trade Mark
- This action is for passing off and infringement of the CTM. By the time it was commenced, the Defendant (through its parent within the Brooks Brothers group, then called 'Retail Brand Alliance') had already begun proceedings in OHIM under Article 53 of Council Regulation 207/2009 for a declaration that the CTM was invalid, because it was granted contrary to Article 8(4). The grounds of invalidity were that Brooks Brothers were entitled to prohibit the use the mark by the Claimant by reason of its own right of action in passing off in the UK.
- On 31 May 2012 the Defendant applied to stay the whole of these proceedings in the UK. Under Article 104 of the Regulation, a national Court must stay proceedings for infringement brought when there is a pending application for a declaration of invalidity in OHIM unless there are 'special grounds' for continuing those proceedings.
- On 13 July 2012, Arnold J, sitting as a Judge of the Patents County Court, ruled that the CTM infringement claim must be stayed on the basis that there were no 'special grounds' for allowing it to continue. However, he refused to stay the passing off action.
- To complete the picture, I have been told that OHIM subsequently decided to stay the invalidity proceedings pending the outcome of the passing off action (even though the passing off alleged here is the 'other way around', they considered that the decision in this action is likely to be material to the outcome of those proceedings).
- As a result of all this, the possibility has arisen that the parties may have to engage in 3 consecutive sets of proceedings (which might themselves include appeals) before it is finally established whether the Defendant can continue to use its device. If for example the Defendant were to succeed in the passing off claim before me on its defence of 'honest concurrent use', this would not resolve either the CTM proceedings or the allegation of infringement of the CTM. This trial (and any subsequent appeal) would therefore be followed by the OHIM invalidity proceedings (and any subsequent appeal) and (if those proceedings were unsuccessful) by the CTM infringement action in the UK (and any subsequent appeal). This is a plainly unsatisfactory situation.
Passing off
- The well-known principles of passing off are traditionally distilled into the 'classical trinity' of 'reputation/goodwill', 'misrepresentation' and 'damage'.
Goodwill
- There is no dispute in the present case that the Claimant has established a goodwill in the minds of its customers for the production and sale of high quality shoes, boots and other leather goods. Two points are taken on goodwill by the Defendant.
- First it is said that the goodwill 'is relatively insubstantial and would not extend to the whole of the UK and particularly not Edinburgh'. I have no hesitation in rejecting this submission. The Claimant may trade from a single set of premises. However, those premises are in Jermyn Street, the premier site in London for the sale of men's shoes and clothing. Trade from such store is not 'local' in the sense that it only attracts customers from the immediate locality. Furthermore, on the undisputed evidence the Claimant has customers in 75 different countries in the world.
- Second, it is said that the goodwill does not 'attach' to the fox and boot device as such. One has to be a little careful about the use of language here. Strictly speaking, goodwill (the 'attractive force which brings in custom') is created by the reputation of the products or services of a particular business. That goodwill will ordinarily be triggered in the public mind by the use of one or more indicia which have come to be associated with the business. These may be trade names, logos or other things such as colours or musical themes. Ultimately, the submission here is simply that the fox and boot device itself is not sufficiently distinctive of the Claimant's business in the public mind to trigger the relevant goodwill.
- No challenge is made to the substantial evidence of use of the fox and boot device in connection with the Claimant's business over a period of 48 years which I have summarised above. The points which are made are (i) that the device is not inherently very distinctive since it comprises a boot (descriptive of bootmaking) and a fox (descriptive of fox hunting for which specialised boots are used); (ii) that the device has never been used on its own, that is to say without the presence of the name Foster & Son.
- I do not accept the submission that the device lacks distinctive character. On the contrary, it seems to me highly distinctive and memorable. The conjunction of boot and fox is not descriptive of anything. Furthermore, the device is more than simply a boot and a fox. It is a particular style of boot and a particular depiction of a fox, arranged in a particular way. It is correct to say that it is allusive, as Mr Hackett put it: 'an authentic link to a bygone era of English life. It represents a quintessentially English, artisan industry and in my mind is evocative of heritage, quality and tradition.' But this does not mean that it lacks distinctiveness. On the contrary, it is all the more memorable and identifiable for that allusive quality.
- As for the point that the device is always used along with the name of the Claimant, this does not preclude a claim in passing off based on the device. The device and the name are not indivisible parts of a single logo. They are separate entities, as indicated by the fact that they have been used by the Claimant in many different positions in relation to each other over the years. There can be no serious doubt that the Claimant's customers will recognise the fox and boot device as the Claimant's logo and the name 'Foster & Son' as the Claimant's name.
Misrepresentation
- The Claimant submits that it is likely that a substantial proportion of its customers would, seeing the fox and boot device on the Defendant's shoes and other leather products, wrongly assume either (a) that those products are manufactured by the Claimant; or (b) that those products are connected with or authorised by the Claimant.
- So far as the nature of the supposed connection or authorisation in (b) is concerned, Mr Alkin expanded it in argument to the following possibilities: (i) Foster & Son uses the Peal & Co. name when making shoes for others; (ii) Foster & Son and Peal & Co are two different names used by the same underlying manufacturer; (iii) Foster & Son and Peal & Co are offshoots of the same business; (iv) Foster & Son has been absorbed by Peal & Co who have adopted the fox and boot device.
- It is not disputed that any one of these types of deception would be sufficient for passing off. But the Defendant argues strongly that none of them is likely on the facts of the present case. It does not suggest that those seeing the fox and boot device as it appears on the Defendant's shoes would be able to differentiate it from the Claimant's fox and boot device (given the extreme similarities between the devices, this is highly unlikely). Rather, it submits that its entire sign should be taken as whole and that it has three separate aspects. First the name Peal & Co, second the fox and boot, third the words 'made in England exclusively for Brooks Brothers'. So, submits the Defendant, anyone seeing the mark would immediately understand that the manufacturer of these shoes was Peal & Co, not Foster & Co., and no deception would ensue.
- I do not accept this argument. First of all, although a very few older customers might recognise the Peal & Co. name from the past, the vast majority would not. Mr Moore was the witness with the most experience of dealing with customers of this kind of merchandise on a regular basis. Questioned by me he said as follows:
Q When was it that you last stopped dealing with customers on a regular basis?
A Oh, gosh it could be 10 years ago
Q Do you have any recollection of the extent to which customers 10 years ago would still have been familiar with the old Peal & Co. name?
A I wouldn't have thought so. It is such a long time ago. I would think that most people who had shoes made by [here the transcript reads 'Foster & Son but this is clearly in error for 'Peal & Co.'] are probably long gone'.
Mr Jones did not seem to disagree with this, although thought that there would be 'some' people who still remembered Peals.
- Mr Aikens placed some reliance on the fact that the Foster & Son website includes some pages of 'history' which include references to Mr Moore's association with 'Peal & Co.', 'the famous boot and shoemakers of 487 Oxford Street'. I do not take this as a suggestion that Peal & Co. is famous today. Rather they were famous in their day.
- This means that a substantial number of the Claimant's customers, seeing the Defendant's trade mark, would see the name of an unknown company (Peal & Co.) immediately above a trade mark (the fox and boot device) which they associated exclusively with the Claimant. Why would such a shoe bear the Foster & Son logo? Other than to indicate a trade connection, the only other possibility is pure coincidence. To my mind, it is most unlikely that many of such customers would think it coincidental that two companies had adopted the same logo for high quality shoes.
- The Defendant submits that its case is bolstered by the absence of any evidence of actual confusion having occurred in the market place. I take this into account, but it seems to me to be a relatively insignificant factor. It is commonplace to observe that evidence of actual confusion is hard to obtain even where such confusion is actually occurring. Those who are confused will generally have no reason to tell anyone about it, particularly if they are never disabused of that confusion. Mr Aikens submitted that if confusion were occurring one would expect customers to have taken the Defendant's shoes to the Claimant for repair and the absence of such incidents was significant. I do not accept this. First, the number of repairs would presumably be small, given the relatively small number of shoes sold and the quality of the shoes. Second, I would expect customers with problems to take the shoes back to the outlet from which they had been purchased.
- In the end, I consider that it is highly likely that a substantial number of customers with whom the Claimant has goodwill would be deceived by the presence of the fox and boot logo on the Defendant's shoes and other products into believing either that they were manufactured by the Claimant or that they were connected or associated with the Claimant in some other way. It is not necessary to be precise about the nature of the connection which they would believe existed. It is enough that they would think that the Claimant was in some way responsible for or prepared to put its name behind the quality of the goods, either as being the company behind 'Peal & Co.' or as having licensed the use of its mark on those goods. If they thought about it in any more detail than that, then I consider that they would be likely to conclude that one of the various possibilities canvassed by Mr Alkin in argument was in fact the case.
- Mr Aikens stressed in his argument the difference between 'mere wondering' on the part of a consumer as to a trade connection and an actual assumption of such a connection. In Phones 4U Ltd v Phone 4U.co.uk Internet Ltd [2007] RPC 5 at 16-7 Jacob LJ stressed that the former was not sufficient for passing off. He concluded at 17:
This of course is a question of degree – there will be some mere wonderers and some assumers – there will normally (see below) be passing off if there is a substantial number of the latter even if there is also a substantial number of the former
I am satisfied that the presence of the fox and boot logo on the Defendant's products will cause a substantial number of customers familiar with the Claimant's logo to assume a connection between them. The 'wondering' situation will generally arise where there is a reasonable possibility that the similarities between the Defendant's and Claimant's mark, logos or get-ups might be due to pure coincidence. This will commonly be the case where the Claimant's mark, logo or get-up is not particularly distinctive or the similarities are not particularly striking. But in the present case, the distinctiveness of the logo and the degree of similarity are very high. As I have said above, coincidence is not a likely explanation for the similarities in the present case. The only obvious explanation is therefore that the logo is being used to indicate some kind of commercial connection.
Damage
- Although proof of damage is an essential requirement of passing off cases, it will generally be presumed where a misrepresentation leading to a likelihood of deception has been established, since such deception will be likely to lead to loss of sales and/or more general damage to the exclusivity of the Claimant's unregistered mark. Mr Aikens accepted that if there was a misrepresentation in the present case, then he had no separate case on damage. I hold that damage is inevitable, at least in the sense recognised in Sir Robert McAlpine v Alfred McAlpine [2004] RPC 36 at 49 (the 'blurring, diminishing or erosion' of the distinctiveness of the mark).
Concurrent goodwill
- It is well-established that there are cases in which, despite the existence of the elements of the 'classical trinity' of goodwill, likelihood of deception and damage, a Claimant will not be able to restrain the use of a confusingly similar mark by a Defendant. One subset of these cases is where the Defendant can justify the use of his mark on the basis of his own goodwill built up independently of the Claimant. In Phones 4U at paragraph 21 Jacob LJ described such a case of 'honest concurrent use' as being an example of 'tolerated deception or a tolerated level of deception'. The Defendant in the present case claims the benefit of such a defence.
- The doctrine was explained by Lord Diplock in General Electric [1972] 1 WLR 729 at 743 as follows:
'the interest of the public in not being deceived about the origin of goods had and has to be accommodated with the vested right of property of traders in trade marks which they have honestly adopted and which by public use have attracted a valuable goodwill.'
- In Hotel Cipriani v. Cipriani (Grosvenor Street) Ltd [2009] RPC 9, Arnold J at first instance noted at [232] that concurrent goodwill 'can in appropriate circumstances constitute a defence to a passing off claim'. So far as I am aware, there are two recognised types of 'appropriate circumstances' in which a defence of based on honest concurrent use may exist.
- The first type involves independent goodwill built up over the years in separate localities by different traders who then come into collision as a result of increased trade. This is the first instance given by Lord Diplock in GE after the passage quoted above. One example of this in the authorities (though strictly obiter) is the position of the Defendant in the Hit Factory case, see Peter Waterman v CBS United Kingdom Ltd [1993] ETMR 27 at 50.
- The second are 'common ancestor' cases where both parties originally derived their use of the name legitimately from the same source and have since traded under the name alongside one another. The most famous example of this is the clockmaker case of Dent v Turpin (1861) 2 J&H 139 quoted by Jacob LJ in Phones 4U at 22. There, father Dent had two clock shops in London and had bequeathed one each to his two sons. Both traded legitimately as Dent, and it is clear that neither could have brought an action to stop the other. Either or both was entitled to bring an action to stop a third party, Mr Turpin, from using the Dent name. Other examples can be seen on the facts of Habib Bank v Habib Bank [1982] RPC 1 and Sir Robert McAlpine v Alfred McAlpine [2004] RPC 36. McAlpine is also an illustration of one of the limits of the doctrine: if the Defendant starts to trade in a way which is materially different from the way in which he has legitimately built up his own goodwill, so as to cause confusion with the Claimant (in that case it involved a change in the use of the sign itself, by dropping the distinguishing identifier 'Alfred', but other instances might involve a change of business practice such as moving to a different geographical area), then the honest concurrent use defence will not help him.
- The authorities therefore seem to me to establish that a defence of honest concurrent use in a passing off action requires at least the following conditions to be satisfied:
(i) the first use of the sign complained of in the United Kingdom by the Defendant or his predecessor in title must have been entirely legitimate (not itself an act of passing off);
(ii) by the time of the acts alleged to amount to passing off, the Defendant or his predecessor in title must have made sufficient use of the sign complained of to establish a protectable goodwill of his own;
(iii) the acts alleged to amount to passing off must not be materially different from the way in which the Defendant had previously carried on business when the sign was originally and legitimately used, the test for materiality being that the difference will significantly increase the likelihood of deception.
- In the present case, the acts of the Defendant which are complained of in these proceedings concern its sale of shoes and other goods branded with the fox and boot device through its retail outlets in London and through its UK website. These activities commenced in late 2005. This is therefore the date at which the cause of action in passing off must be assessed (the 'relevant date').
- The Defendant does not claim that it had any goodwill of its own at the relevant date. Indeed it appears that the Defendant was only established in 2005, for the express purpose of running the new stores and the new UK website.
- The Defendant seeks to rely on what it claims to be the concurrent goodwill of its ultimate parent company, Brooks Brothers Group Inc. This company in turn claims to be the successor in title to the goodwill formerly owned by Brooks Brothers (New York) Limited, which (as we have seen) purchased the goodwill of Peal & Co. back in 1964.
- The long series of corporate transactions by which the alleged goodwill is said to have been assigned is somewhat murky and not fully explained in the evidence. However, in the end Mr Alkin was minded to accept that on the balance of probabilities any goodwill which had been owned by Brooks Brothers (New York) Limited was assigned to Brooks Brothers Group, Inc. He was also prepared to accept that if Brooks Brothers Group, Inc did own any concurrent goodwill, they could pass on any defence which it gave them by licensing another company in their group to exploit that goodwill. I consider that both those concessions were well made. As far as the latter is concerned, it is hard to see how liability in passing off could turn on the particular corporate vehicle within Brooks Brothers which was chosen to use the mark.
- As we have seen, by the assignment dated 31 December 1964, Brooks Brothers (New York) Limited purchased all the goodwill of the business and all rights to the use of the unregistered trade mark which is essentially the mark complained of in these proceedings. There is no doubt that this was a legitimate purchase which could have given rise to an honest concurrent use defence of the 'common ancestor' type. The key question is what happened thereafter, and in particular whether feature (ii) of the defence which I have identified in paragraph 61 above was established. As of 2005 was Brooks Brothers in possession of a concurrent goodwill in the United Kingdom associated in the mind of the public with the fox and boot device?
- The Claimant puts its case in two ways. First, it says, the goodwill originally acquired by Brooks Brothers (New York) Limited by the terms of the Agreement of 31 December 1964 was abandoned as a result of the termination of the business of Peals in January-February 1965. Second, it says, neither Brooks Brothers (New York) Limited nor any company in the Brooks Brothers Group engaged in any trade with United Kingdom customers under the fox and boot logo between 1965 and 2005. Any goodwill which might have existed as of 1964 and survived the demise of Peals had ceased to exist long before 2005.
- I deal with the abandonment case first. The doctrine of abandonment of goodwill is intimately tied up with the basic principle that goodwill has no free-standing existence. It is simply a property right attached to a particular business. If the business dies, then so does the goodwill. See Lord Diplock in Star Industrial v Yap Kwee Kor [1980] RPC 31:
'Goodwill, as the subject of proprietary rights, is incapable of subsisting by itself. If has no independent existence apart from the business to which it is attached. It is local in character and indivisible; if the business is carried on in several countries a separate goodwill attaches to it in each. So when the business is abandoned in one country in which it has acquired a goodwill the goodwill in that country perishes with it although the business may continue to be carried on in other countries…Once the Hong Kong Company had abandoned that part of its former business that consisted of manufacturing toothbrushes for export to and sale in Singapore it ceased to have any proprietary right in Singapore which was entitled to protection in any action for passing-off brought in the courts of that country.'
- There is little doubt that the business of Peals was abandoned by a series of very public acts. Just as in the well-known abandonment case of Pink v Sharwood [1913] 30 RPC 725 the employees were laid off, all sales stopped and the means of production were broken up. There was a clear and explicit expression in an interview with the press that Peals intended to stop trading in the United Kingdom altogether. However, unlike in Pink v Sharwood, those acts took place only after the goodwill was assigned to a third party (Brooks Brothers (New York) Limited). Furthermore, the assignment of goodwill was not a 'bare assignment'. It was on the face of it sold together with the vital assets for maintaining and exploiting that goodwill, namely the customer lists and the lasts and equipment necessary to serve those customers. The thrust of the Agreement is that Peals will cease trading in the United Kingdom and elsewhere (as they did), but there is nothing in the Agreement to indicate that Brooks Brothers will not carry on the business themselves in the United Kingdom in some form.
- The termination of the business of Peals in January-February 1965 is therefore not determinative in itself of the issue of abandonment. The question must be looked at more broadly. Did Brooks Brothers, through its conduct in the early part of 1965, whilst Peals was winding up its business, behave in such a way that it could be said to have abandoned the business and goodwill in the United Kingdom associated with the Peal & Co. name and the fox and boot trade mark?
- In my view it did. Firstly, although it had technically purchased the customer lists and the equipment necessary to keep the established business going in the United Kingdom, it is clear from the evidence of Mr Moore that it allowed those assets to be dissipated or destroyed. In those circumstances, if it had wished to preserve the goodwill in the United Kingdom under the trade marks, it would in my view have had to take steps fairly quickly to preserve the goodwill by launching a new business under those marks and educating the public that it was the successor to the old Peals business. No such steps were taken. Indeed, it must be a reasonable inference that the statement in the Associated Press report, presumably based on a comment of Mr Rodney Peal, that 'Peal's readymade shoes, produced from the firm's lasts and special leather at factory in Northampton, will still be sold in the United States by Brooks Brothers of New York. But the custom-made shoes will be no more, and all the British sales will end' was a fair reflection of the intentions of Brooks Brothers, and the message which Brooks Brothers were content to send to the market in the United Kingdom.
- In all the circumstances, by promoting (through clauses 4 and 5 of the Agreement) the destruction of the Peals business, by failing to take any steps to preserve a business in the United Kingdom, and by allowing the United Kingdom market to assume that Peals no longer existed, I consider that Brooks Brothers had abandoned any and all the goodwill in the United Kingdom associated with the Peals business, including any goodwill associated with the fox and boot device.
- If I am wrong about that, then the question arises whether the goodwill owned by Brooks Brothers and associated with the fox and boot device was lost over the 48 years which elapsed between the destruction of the Peals business and the commencement of sales of fox and boot branded merchandise by the Defendant in 2005.
- In my view, any such goodwill was plainly lost over time, regardless of the question of abandonment. The Defendant's case as to the maintenance of their goodwill is based on two matters. First they rely on what might be called the 'folk memory' or 'residual goodwill' enjoyed by the Peal & Co. brand in the minds of their customer base. This seems to me to be a hopeless argument. The customers of Peals in the 1960s would not have known that the goodwill had been acquired by Brooks Brothers. All they would have known was that Peals had ceased to exist. They would probably never have expected to be able to acquire Peals merchandise again, and any hope of doing so would have expired very quickly as they passed their trade to other suppliers, with no sign of Peals being revived. A very few long-lived customers might, as of 2005, still have had some recollection of the old company, perhaps even with a dusty pair of shoes still in the cupboard. But this can hardly be described as an aspect of 'goodwill'. Goodwill is not merely the memory of a business. It is the 'attractive force which brings in custom'. The acid test for its existence in the present case must be whether, seeing a new pair of shoes bearing the 'Peal & Co.' name and the fox and boot brand, such customers would place any reliance on the quality of the old product from the early 1960s when considering whether to buy it. Plainly they would not. The brand would have to justify itself afresh. Residual goodwill cannot seriously expect to survive 48 years with no use.
- Second, the Defendant claims that it maintained the goodwill associated with the Peal & Co. and fox and boot brand by selling footwear and other merchandise into the United Kingdom market under that brand throughout the period 1965 to 2005. The alleged medium of these sales was the Brooks Brothers mail order catalogue which was distributed on a limited basis in the United Kingdom.
- The evidence in support of these alleged sales is thin in the extreme. The witness advanced by the Defendant to prove them was a Mr Amendola, the Chief Merchandising Officer of Brooks Brothers Group, Inc. He could not claim any direct knowledge of any sales prior to his employment in August 1998. Even after that date, he was for the most part reliant on what was shown in the records of the company.
- Prior to the relevant date, the only documentary evidence which has been provided comprises a few pages from a few examples of mail order catalogues from 1981 onwards, containing, amongst a great deal of other stock, some Peal & Co. merchandise (on some of which the fox and boot device is just visible). This is a far from complete set, but Mr Amendola was unable to explain the basis on which it had been provided. In particular he was unable to say whether it represented all catalogues which could be found containing any Peal & Co. merchandise. It would appear that the pages in question had been identified by lawyers acting for Brooks Brothers.
- On the basis that Brooks Brothers can be assumed to have been seeking to present the strongest case they could, and that Mr Amendola's evidence was that they had a complete set of catalogues dating back to 1981, I indicated in the course of closing that I would proceed on the basis that what had been exhibited represented all the pages from all the mail order catalogues distributed between 1981 and 2005 which had included Peal & Co. merchandise. I believe that this is a fair conclusion in the circumstances, and no attempt has been made by the Defendant to file further evidence suggesting that I am wrong to draw it.
- Several points should be made about the catalogues:
(i) At least 4 catalogues a year seem to have been issued (at one point Mr Amendola said the numbers were up to two per month). Only 1 or 2 of these in any particular year prior to 2006 seem to have included any Peal & Co. merchandise.
(ii) The catalogues are very much aimed at trade within the United States. The postage fees given are local postage fees. The prices are in dollars. Although it seems that it was possible to place orders from abroad, this would have involved a telephone order and a negotiation of a special delivery arrangement.
(iii) The fox and boot device is generally not visible even on those products which appear in the catalogues.
(iv) The catalogues contain a very large range of products. Any Peal & Co. merchandise is a tiny proportion of what is shown.
- The key question in the end is whether any significant trade in the United Kingdom in Peal & Co./fox and boot branded merchandise was generated by these catalogues. As to this, the evidence was fairly remarkable. The Defendant relied almost entirely on an affidavit filed by a Mr Arthur Crispino in the UK Trade Mark Registry in 1996 (it was executed on June 13 of that year). This affidavit claims in paragraph 4 that 'Over the past seven years, the sales of PEAL & CO. shows in the United Kingdom have exceeded US$704,000 on an annual basis'. It is unclear whether the reference to the past seven years in June 1996 was a reference to the trading years 1989-1996 or 1988-1995, but it does not matter. Mr Amendola's evidence in his witness statement about this passage in the Crispino affidavit was that 'supporting documents upon which it was based cannot be found, or may have been destroyed. There is however, no reason for me to doubt the figures which are provided in the Arthur Crispino Affidavit'.
- Mr Crispino was apparently the vice-president in charge of marketing and trade marks at Brooks Brothers. He has since retired, but it is not suggested that he is no longer alive. Mr Amendola was unable to help me with my inquiry as to the steps which had been taken to find Mr Crispino. He had not personally made any effort to speak to him. A witness statement was later filed on behalf of the Defendant which (in summary) simply said that internal inquiries had indicated that the company did not have any contact details for him. This did not indicate that any steps at all had been taken to track him down, beyond asking around the office.
- In the end, Mr Aikens asked me to accept the evidence of Mr Crispino, on two bases: (i) that his statement had been provided in a sworn affidavit and (ii) that Mr Amendola was prepared to say on oath that he had no reason to believe that it was not accurate. I am not prepared to do so. Important evidence of this kind should be given by the evidence of witnesses who can be properly challenged by cross-examination. Mr Crispino was not made available for such challenge, and it was clear that Mr Amendola had no knowledge at all of the actual sales figures in the United Kingdom at the time in question, so his corroboration of Mr Crispino's testimony (which was half-hearted at best) cannot add to its credibility. Furthermore, Mr Crispino gives no explanation of the basis on which he gives his evidence. He does not even say what documentary evidence he has consulted in order to arrive at it. Worse still, as I shall explain, the documentary evidence which has been provided is entirely inconsistent with Mr Crispino's figures.
- The most telling evidence here is the computerised record of sales in the United Kingdom from the mail order catalogue (and the US website) between 2003 and 2010, provided on disclosure by the Defendant. It shows, as Mr Amendola accepted, that only one single pair of Peal & Co. shoes was sold in this entire period 2003-2007 (on Boxing Day 2003), and no other Peal & Co. merchandise. There is no reason to believe that the period 1989-1996 would have been materially different in terms of UK sales. Indeed, if anything, the UK sales might be expected to have been worse in that period. The Brooks Brothers website was not established in the period 1989-1996, and the single sale in 2003 was probably a website sale, since it was at a special Boxing Day price which would not have been reflected in the catalogue.
- In the circumstances, the idea that at least $704,000 worth of sales (representing about 3,000 pairs of shoes) was achieved each year in the period 1989-1995 is ludicrous. I therefore do not accept the evidence of Mr Crispino on this point. When Mr Amendola said in evidence that he had no reason to disbelieve Mr Crispino, I can only conclude (charitably) that he had not engaged in any critical analysis of the statement at all. If he had done so, he would have found ample reason to disbelieve him.
- In the light of all the evidence, I conclude that sales of fox and boot device branded products by Brooks Brothers through their mail order catalogues or otherwise prior to 2006 were practically non-existent. On any view, there was insufficient trade to preserve the goodwill which had belonged to Peals and was acquired by the Agreement in 1964.
- The defence of honest concurrent use therefore fails. The legitimate use of the fox and boot device by the chain of companies through which the Defendant claimed its defence ceased in 1965. By 2005, neither the Defendant nor any other company apart from the Claimant had any goodwill associated in the mind of the public with the device. It had either been abandoned in 1965 or long since lost through disuse. The Defendant fails to satisfy requirement (ii) of the defence, which I have identified in paragraph 61 above.
- For the avoidance of doubt, even if I had held that there was some concurrent goodwill as a result of the minimal catalogue sales which could have given rise to a defence in principle as of 2005, I would have held that this defence did not extend to the acts of passing off complained of in this case, namely the sale of such goods through retail outlets in the United Kingdom and through the Defendant's website. Such activities are of a materially different kind from the odd appearance of a product in a Brooks Brothers catalogue. They are on a much greater scale and more likely to cause deception and to take advantage of the Claimant's goodwill. The Defendant would therefore have failed requirement (iii) of the defence in any event.
Conclusion
- The Claimant succeeds in the passing off claim. The use by the Defendant of the fox and boot device on products sold from its stores in the United Kingdom or through its website to customers in the United Kingdom amounts to passing off those products as and for the products of the Claimant or as connected in the course of trade with the Claimant. The Defendant has no defence based on concurrent goodwill.
- I will hear counsel on the form of relief and other consequential orders.
