DSG Retail Ltd. v. PC World Ltd. [1998] IEHC 3 (13th January, 1998)

2. The Plaintiff is a limited liability company incorporated in the United Kingdom where it operates a nation-wide chain of large retail outlets, which it characterises as computer superstores and which trade under the name PC WORLD. It opened its first PC WORLD superstore in Croydon in October 1991, its second in Essex in June 1992 and by Christmas 1992 further stores had been opened in London and in Brentford. Currently the Plaintiff operates a total of thirty five PC WORLD superstores throughout the United Kingdom, one of which, located at Sprucefield, Lisburn in Northern Ireland, was opened in August 1994. From these outlets the Plaintiff retails a vast range of computer hardware and software and computer accessories and books and printed matter relating to computers. In the main the products retailed are manufactured by manufacturers such as Compaq, Packard Bell, Microsoft and such like. The name PC WORLD appears on the facade of these outlets. The Plaintiff produces a publication entitled "PC WORLD Buyer's Guide" at periodical intervals, every five to six weeks, to promote and advertise the products it stocks in its PC WORLD superstores and frequently distributes this publication by means of "door dropping" in a targeted area. It also produces and distributes vast quantities of printed material which bears the mark PC WORLD in connection with the business carried on in the superstores, for example, instructional leaflets. It advertises its PC WORLD business in the print and broadcast media and in the period from May 1993 to June 1996 it expended sums in excess of £10 million sterling on press, radio and television advertising. It claims that during that period it advertised in tabloid and broadsheet newspapers published in the United Kingdom which have extensive circulation in this jurisdiction, on radio stations, including radio stations in Northern Ireland, and on British television channels, such as Ulster Television, whose broadcasts and transmissions are received in this jurisdiction. In August and September 1994 it advertised in an Irish newspaper, The Irish Times.

3. The turnover generated by the Plaintiff's PC WORLD superstores for the period from 1st May, 1992 to 30th April, 1996 exceeded £480 million sterling. The turnover generated by the superstore in Sprucefield, Lisburn in Northern Ireland from August 1994 to August 1997 exceeded £20 million sterling and the Plaintiff estimates that at least 4% of its annual sales through that outlet are to customers who are resident in this jurisdiction.

4. The Plaintiff's first PC WORLD superstore in this jurisdiction, which is located at the Blancharstown Centre in Dublin, was opened on 7th November, 1997, the decision to open it having been made in January 1997 following the success of another retail operation of the Plaintiff, which trades under the name Dixons and which was opened at the Jervis Centre in Dublin in December 1996.

5. The basis of the Plaintiff's claim in these proceedings is that even before it opened the superstore in the Blanchardstown Centre it had established a substantial and extensive goodwill and reputation in this jurisdiction in the name and mark PC WORLD having regard to the number of customers from this jurisdiction it attracted to its superstores in the United Kingdom and the extent of its advertising which reached the public in this jurisdiction.

6. On 10th October, 1996 the Plaintiff filed an application, to which the Defendants intend to object, to register the name PC WORLD as a trademark in this jurisdiction in respect of computer hardware and software and computer accessories and printed material. It has already procured similar registration in the Trademarks Registry of Great Britain and Northern Ireland as of 10th June, 1996.

7. The first Defendant is a company which was incorporated in this jurisdiction under the Companies Acts, 1963-1990 on 2nd January, 1997. The second and third Defendants are directors of the first Defendant. The second Defendant is a qualified computer network engineer who provides computer consultancy services to businesses in this jurisdiction through the medium of a company called Network Systems Management Limited. Having perceived a market opening for the supply of computer hardware and software in the course of his consultancy work, in August 1996 the second Defendant decided to incorporate a company to be called PC World Limited to supply such products and to provide services including network management and training. Since its incorporation the first Defendant has been trading, initially from the Enterprise Centre in Terenure in Dublin and currently from a unit in The Maltings Business Park at Marrowbone Lane in the City of Dublin. The first Defendant has advertised its business by means of the circulation of leaflets, and by advertising in "free sheets" circulating in Dublin City, in national newspapers and in a computer magazine. Since February 1997 the Plaintiff has had a website on the Internet and its website is registered on the Irish Register of Domain Names administered by University College Dublin.

8. The first Defendant retails products similar to the products retailed by the Plaintiff - computer equipment, software and accessories manufactured by manufacturers such as Hewlett Packard, Microsoft and such like - from its Marrowbone Lane premises and provides services such as Internet web page design, software development services and virus management. The Marrowbone Lane premises are more in the nature of an office unit than a retail outlet or showroom. In reality the Plaintiff does not have a "passing trade" as such but attracts customers through its advertisements, its presence on the Internet or in consequence of an introduction from Network Systems Management Limited. The Defendants contend that by reason of the scale, personal nature and method of marketing of its business, there is no likelihood of confusion with the Plaintiff's business.

10. The Plaintiff became aware of the existence of the first Defendant in mid-September 1997. By letter dated 29th October, 1997 to the first Defendant, the Plaintiff's agents in this jurisdiction, MacLachlan and Donaldson, alleged that the first Defendant was passing off its goods and services as those of the Plaintiff and demanded that the first Defendant immediately refrain from making any further use of the name and trademark PC WORLD in connection with its business. The response of the first Defendant's solicitors was a denial that the first Defendant had ever represented that it had any connection whatsoever with the Plaintiff or its business or that there was any confusion between the Plaintiff's business and the business of the first Defendant and an assertion that the first Defendant had at all times traded lawfully and intended to continue to trade under its company name. These proceedings were initiated by a Plenary Summons issued on 12th November, 1997.

11. Lest it appear otherwise, I should say that the facts outlined above in relation to the Plaintiff and its business, which are derived from affidavits sworn on behalf of the Plaintiff by its company secretary, Geoffrey David Budd, are not entirely free of controversy. The Defendants, in the affidavits filed on their behalf and through their Counsel, have been critical of the quality of the evidence adduced by the Plaintiff. Similarly, the facts in relation to the first Defendant and its business outlined above, which are largely gleaned from affidavits sworn on behalf of the Defendants by the second named Defendant, are not entirely free of controversy either. In an affidavit sworn by him on 1st December, 1997 the second Defendant averred as follows:-

"The name 'PC World' was chosen by me for a number of reasons. Firstly, a catchy title was necessary and we wanted a title in which the initials 'PC' formed a part. The initials 'PC' are now standard world-wide initials for 'personal computer'. They also happen to be the initials of me, this deponent. I also wanted a short catchy descriptive word to go with the initials 'PC' which would convey a particular meaning. The meaning which I sought to convey was that there would be limitless variety of products available to suit clients ...... 'World' was the obvious choice".

13. The evidential conflicts to which I have alluded cannot be resolved on this application. Neither can the evidential conflicts surrounding the Defendants' assertion that, as a matter of fact, apart from the Plaintiff, the first Defendant is not the only business in the State operating under the name "PC WORLD". The Plaintiff has sought to dispute the significance of the following matters relied on by the Defendants in support of their contention that the name "PC WORLD" is not distinctive of the Plaintiff's business in this jurisdiction:

(a) the fact that RCS Limited, against whom the Plaintiff has recently sought interlocutory injunctive relief similar to the relief claimed against the Defendants in this Court, is trading as "PC WORLD" in Dundalk, Co. Louth, and, the Defendants assert, has been openly trading from retail premises under that name since 1994, and registered the name "PC WORLD" as a business name under the Registration of Business Names Act, 1963 in connection with computer supplies on 30th January, 1997;

15. Against the foregoing factual background it was submitted by Mr. McDonald on behalf of the Defendants that the Plaintiff's application should be considered on the basis that what the Plaintiff is seeking against the Defendants is, in effect, mandatory relief - an order directing the first Defendant to change its name. It is true that if the relief sought by the Plaintiff is granted and if the first Defendant wishes to continue to trade pending the trial of the action, it will have to change its name and effect a considerable number of consequential changes, for example, its VAT registration, its telephone directory listing, etc. However, any such changes effected would flow from the Defendants' desire to obviate the consequences of the grant of the relief sought by the Plaintiff, which, in my view, is prohibitory in substance as well as form. Accordingly, the Plaintiff's entitlement to the relief it claims falls to be determined by the application of the principles set out by the House of Lords in American Cynanamid Company -v- Ethicon Limited (1975) AC 396, as adopted by the Supreme Court in Campus Oil Limited -v- Minister for Industry and Energy (No. 2) (1983) I.R. 88.

"[The plaintiff] must establish a goodwill or reputation attached to the goods or services which he supplies in the minds of the purchasing public by association with the identifying get-up (whether that consists simply of a brand name or trade description or the individual features of labelling or packaging) under which its particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive, specifically as the plaintiff's goods or services. Second, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe the goods or services offered by him are the goods or services of the plaintiff .....Third, he must demonstrate that he suffers or in a quia timet action that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the sources of the defendant's goods or services is the same as the sources of those offered by the plaintiff".

18. The Defendants disputed that there is a serious issue to be tried that the Plaintiff had established a goodwill or repudiation in the mark or name PC WORLD in this jurisdiction prior to the commencement of trading by the first Defendant under that name. The Plaintiff's response was that it is not necessary that the Plaintiff should have a place of business in this jurisdiction in order to sustain an action for passing off and cited the decision of the Supreme Court in C. & A. Modes -v-C. & A. (Waterford) Limited (1976) I.R. 198 and, in particular, on the following passage from the judgment of Henchy J. at page 212:

"If there are in the State sufficient customers of a plaintiff's business to justify his claim to have a vested right to retain and expand that custom, then there is ample authority in principle and in the decided cases for the conclusion that, no matter where the plaintiff's business is based, he is entitled to be protected against its being taken away or dissipated by someone whose deceptive conduct is calculated to create a confusion of identity in the minds of existing or potential customers".

21. The Defendants further contended that the Plaintiff had not adduced any evidence that persons in this jurisdiction associated the name PC WORLD with the Plaintiff's business and with no other business and that, having failed to prove the distinctiveness of the mark or name in relation to the Plaintiff's business, its action must fail in limine. The Defendants adopted the explanation of the concept of distinctiveness in passing off to be found in Wadlow on The Law of Passing Off , 2nd Edition, (Sweet & Maxwell, 1995) in the following terms at paragraph 6.02:

"'Distinctive' is a term of art in the law of passing off and bears a meaning at variance with that in everyday use. Matters such as a name, mark or get up is said to be distinctive if it denotes the goods of the Plaintiff to the exclusion of other traders. It is the significance which the relevant public attaches to the supposed mark which is all important. Matter which is not relied on by the public in this way is not in law distinctive, irrespective of how novel, striking or different it may be".

22. In the absence of evidence from persons residing in this jurisdiction that prior to January 1997 they associated the name PC WORLD with the Plaintiff's business and with the Plaintiff's business alone, it was contended by the Defendants, the Plaintiff's claim must fail in limine. The Plaintiff's response was that the court is entitled to infer from the evidence adduced as to the volume of sale transactions with residents of this jurisdiction and the advertising which was in circulation and capable of being received in this jurisdiction that the public would have exclusively associated the mark and name "PC WORLD" with the Plaintiff's business. On the basis of the evidence adduced by the Plaintiff I consider it is appropriate to draw such inference at this interlocutory stage and I consider that the absence of affidavit evidence from members of the public expressly establishing exclusive association is not fatal to the Plaintiff's claim.

23. The Defendants further contended that the public in this jurisdiction, prior to January 1997, in any event, could not have exclusively associated the mark "PC WORLD" with the Plaintiff's business because of the existence of the businesses trading under the same name in Dundalk and Waterford and the availability of the magazine PC WORLD. All that has to be determined at this interlocutory stage is whether, in the light of the controversy as to the significance of these matters, there is a serious issue to be tried that the name PC WORLD was exclusively associated with the Plaintiff's business in this jurisdiction prior to January 1997. In my view, there is.

24. It was further argued by the Defendants that the term "PC WORLD" is a descriptive term, the initials "PC" being synonymous with personal computer, and that the Plaintiff had not established that it had acquired a secondary meaning as denoting its business. In this connection the Defendants referred to Wadlow at paragraph 6.28 where it is stated that a trader who chooses to use a name or mark which is prima facie descriptive of goods, services or business must prove the mark has acquired a secondary meaning as denoting his goods, and the burden of doing so is higher in proportion to the descriptive quality of the mark. The Plaintiff's response was that the term "PC WORLD" is not entirely descriptive and that there is a metaphorical element in the use of the word 'WORLD' in the term and that, by analogy to the decision of the English High Court in Jian Tools for Sale Inc. v. Roderick Manhattan Group Limited (1995) FSR 924, this Court should hold that the descriptive content of the term PC WORLD does not prevent there being a seriously arguable issue as to misrepresentation. In the Jian Tools case, it was contended that the name "BizPlan Builder" in relation to computer software templates for existing and emerging businesses was entirely descriptive and that it followed that there was no basis for the claim of likely confusion advanced on behalf of the plaintiff. In his judgment Knox J. said at page 938:

"It was common ground that the name 'BizPlan Builder' is indeed largely descriptive. 'Biz' is slang for business, and a business plan is a well known expression for something which is familiar to all acquainted with commercial matters. What was not common ground was that the word 'Builder' in this context is exclusively descriptive. It has, in my view, a descriptive element, in that the 'BizPlan Builder' is sold as a useful tool for the making of a business plan and 'making' and 'building' are closely allied in meaning.

There is, however, a metaphorical element in the use of 'Builder' in this context, and I do not accept that 'BizPlan Builder' is exclusively descriptive. In particular, the use of the capital P in the middle of the word 'BizPlan' cannot be described as descriptive. There is, of course, no hard and fast demarcation between the descriptive and the non-descriptive and it not infrequently happens that trade names are partly but not exclusively descriptive. It was also common ground that when a name is wholly descriptive quite small differences will suffice to avoid passing off, and this underlines the relevance of descriptiveness in a trade name. This is founded on the essential feature in passing off, namely misrepresentation of one trader's goods or services as those of another".

25. At this interlocutory stage the question to be considered is whether, notwithstanding the undoubted descriptive element in the term "PC WORLD" - the initials 'PC' - there is a serious issue to be tried on the issue of misrepresentation and likelihood of confusion. Adopting the conclusion reached by Knox J. in the Jian Tools case, I think there is. In my view, it is well arguable that the term "PC WORLD" is not exclusively descriptive and, on the basis of the evidence adduced by the Plaintiff of confusion since the opening of the superstore in the Blanchardstown Centre, which I am not prepared to infer is entirely attributable to errors made by the telephone directory enquiry service, that there is a likelihood of confusion.

27. I must now consider whether, if interlocutory relief is refused and it subsequently transpires at the trial of the action that the Plaintiff is entitled to injunctive relief, damages would adequately compensate the Plaintiff for any loss suffered between the hearing of the interlocutory injunction and the trial of the action and whether it can be assumed that the Defendants would be in a position to meet an award of damages. Delivering his judgment in Mitchelstown Co-operative Agricultural Society Limited -v- Golden Vale Products Limited on 12th December, 1985, Costello J., as he then was, said that it is axiomatic that in most passing off actions damages are an inadequate remedy for a successful plaintiff. Although in the instant case it should be possible to quantify the loss to the Plaintiff of any business of which the Plaintiff should be found to have been wrongfully deprived by the first Defendant pending the trial of the action and there is no reason for surmising that such loss would be other than "modest" and that the Defendants would be able to meet it, that is not the end of the matter. In the instant case, as in any alleged passing off situation where the Plaintiff has no control over the activity of the Defendant, there would be a potential for unquantifiable damage to the Plaintiff's goodwill and reputation and for the dilution of the value of the mark to the Plaintiff. Accordingly, I must conclude that the normal axiom in passing off actions, that damages would not be an adequate remedy for the Plaintiff, applies here.

28. This leads to consideration of the question whether, if interlocutory relief is granted, the Plaintiff's undertaking as to damages would adequately compensate the Defendants should they be successful at the trial in respect of loss suffered by reason of the injunction being in force pending the trial, it being clear that the Plaintiff would be able to meet any award made on foot of its undertaking as to damages. In his affidavit sworn on

11th December, 1997 the second Defendant has listed the various steps which the first Defendant would have to take if it were to continue trading under a different name pending the trial of the action if the interlocutory relief sought is granted. While undoubtedly effecting these steps would involve costs and expense and would greatly inconvenience the Defendants, it is also undoubtedly the case that damages would adequately compensate the Defendants if it subsequently transpired that they should not have been put in the position of having to take the steps. However the second Defendant also makes the case that there is a potential for unquantifiable damage to the first Defendant's business if it is forced into a position of having to trade under another name at this early stage in its development, due to the impact of such a change on its relationship with its suppliers and its customers. In my view, there is a basis for the Defendant's contention that damages would not be an adequate remedy for them.

29. Accordingly, it is necessary to consider whether there are any other relevant matters which indicate that the balance of convenience (which is a matter of weighing the respective risks of injustice in deciding one way or the other) favours the granting or the refusal of interlocutory relief. In his submissions, Mr. McDonald intimated that his clients, the Defendants, perceive the contest between the Plaintiff and themselves as a contest between Goliath and a flea, a perception which, in my view, is justified having regard to their respective economic "muscle". In commercial terms the capacity of the Plaintiff to overcome the consequences of a refusal to grant interlocutory relief, even given that damages would not be an adequate remedy in the event of the Plaintiff being successful at the action, is hugely disproportionate to the capacity of the Defendants to overcome the consequences of the grant of an injunction. Given this disparity, it seems to me that, if the Plaintiff can be afforded a measure of protection pending the trial of the action without putting the first Defendant in the position of having to change its name and to effect the other consequential changes already referred to, justice does not require that the injunctive relief sought should be granted.

30. The Defendants contend that they have acted openly, properly, in accordance with good commercial practice and bona fide at all times. It will be for the trial judge to decide whether this contention stands up. For present purposes, suffice it to say that there is no evidence before the Court which would lead to a contrary conclusion. Given that and, having regard to the nature of the first Defendant's business operation, I consider that the requirements of justice can be met by undertakings from the Defendants. It was intimated that the Defendants are prepared to give an undertaking not to open any new outlet for their business pending the trial of the action. Subject to the second and third Defendants giving such undertaking on behalf of the first Defendant and themselves and also giving undertakings in the following terms:

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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> DSG Retail Ltd. v. PC World Ltd. [1998] IEHC 3 (13th January, 1998) URL: http://www.bailii.org/ie/cases/IEHC/1998/3.html Cite as: [1998] IEHC 3

High Court of Ireland Decisions

DSG Retail Ltd. v. PC World Ltd. [1998] IEHC 3 (13th January, 1998)