Last week, in Woolley and another v Ultimate Products and another, the Court of Appeal for England and Wales upheld the decision of deputy judge Robert Englehart QC. Woolley imported and sold wholesale HENLEY branded watches. The defendants -- one of whom had an existing business branded “Henleys” for youth streetwear, launched a line of fashion watches at a similar price range and through similar trade channels.  Woolley had a trade mark registration but,  this being currently subject to invalidation action at OHIM, it formed no part of this decision.

Initially the first defendants sought and were granted a licence from Woolley.  This licence, which purported to grant a licence for use of the mark HENLEY in respect of watches to be branded HENLEYS, did contain provision for payment of a royalty and quality control safeguards which were actively enforced.  However, at the end of 2009 the defendants terminated the licence and decided to continue to sell their product without it.  Woolley sued for passing off and won at trial.

 On appeal, the defendants argued that

       *  the judge drew the wrong inferences from the evidence of misrepresentation.  Much of the witness evidence was “the wrong way round”, with trade customers thinking that Woolley's HENLEY watches were the defendants’ HENLEYS watches; 

       *  the judge had not taken the licence into account, and since the defendants had not been in breach of the safeguards, there was no passing off while it was in force, and the defendants had not changed the way they sold their watches post-termination; 

      *  the second gefendants’ concurrent goodwill in “HENLEYS” for clothing had not been given sufficient weight;

     *  the judge failed to consider whether the misrepresentation had been made to a substantial number of members of the public: he was relying solely on his own impression; and

      *  since the judge had found there was no erosion of the HENLEY brand, he could not logically say that Woolley had suffered damage by likely loss of sales.

The Court of Appeal considered that, while there was little direct evidence from the witnesses of operative, non-transitory misrepresentation, following Spalding v Gamage the judge was not bound by this to reach the conclusion that misrepresentation was not made out.  He was entitled to form his own judgment as to whether there had been a misrepresentation after assessing the totality of the evidence.  He was also entitled to leave the licence out of account since there were arguments on it that cut both ways. On concurrent goodwill, the judge had dealt with this at length and reflected it in the injunction that he made.  However, concurrent goodwill did not constitute a defence to passing off because the second defendant did not prove that it had goodwill in the name HENLEYS on its own in the field of watches.  Unless he was plainly wrong, the Court of Appeal would not intervene. 

On substantiality, the judge considered that HENLEY and HENLEYS were virtually identical.  He was entitled to reach the view that they would be perceived as such by all, or almost all, prospective purchasers.  It followed that a substantial number of members of the public would be involved.   The judge gave reasons for holding that the misrepresentation would be the “right” way round:  purchasers of watches were more likely to know of HENLEY watches than HENLEYS clothing, which was known only in the youth market.   At paragraph 47 Lady Justice Arden (giving judgment for the court) said:

“The situation, in which a judge is faced with limited evidence of misrepresentation and clear evidence of confusion, is exactly the sort of situation in which the judge is justified in giving more weight to his own experience and to the other evidence, especially the “real” evidence, as I have called it, than to the evidence of the witnesses.  As I see it, that is what happened here. Given the judge’s clear findings as to very substantial similarities between the watches, in my judgment, the judge was entitled to give the deciding weight to that other evidence and to conclude in substance that there would be a substantial number of people who would be actually deceived.”

On damage, the judge was entitled to infer a loss of sales. There is no absolute requirement for damage to be substantial, and his finding was not on the facts undermined by his quite separate finding that there was no damage to goodwill. Damage need not be shown under more than one head.  Thus the judge’s rejection of erosion of goodwill as a head of damage did not undermine his conclusion that there was a likely loss of sales.

To summarise: 

“... the judge was entitled to reach the conclusion that the appellants had misrepresented their watches produced under the name HENLEYS as those of the respondents.  The judge gave a clear, comprehensive and succinct judgment and no error of law or fact in it has been shown.”

To conclude, the decision is significant for three reasons: