For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

Regular round-ups of the previous week's blogposts are kindly compiled by Alberto Bellan.

Saturday, 28 June 2014

Airline accessories action comes crashing down as passing off claim fails

Over the past fortnight I have spent in excess of 30 hours on aircraft, from London to Singapore to Kota Kinabalu in Borneo, from Sandukan back to Kota Kinabalu and home again, so it is fitting that my first post back from holiday should be about some of the few comforts afforded to economy class passengers onboard planes.


This is just me and a monkey taking a selfie,
nothing to do with the case
Orvec International Ltd v Linfoots Ltd [2014] EWHC 1970 is a passing off and breach of contract case heard by HHJ Hacon in the IPEC and concerned textile products which Orvec sold to airlines for use by their passengers. These products included pillows, blankets, headrest covers, tray mats and towels (Hot towels? Questions Merpel, They burn my paws!).
Linfoots, an advertising agency, handled Orvec’s website and printed advertising, including photography of Orvec’s products. Linfoots retained copyright ownership in these photographs. After nearly a decade of happiness, the parties’ relationship came to an end. The parties went their separate ways.


Some of Orvec’s products were made in Hong Kong by Intex. That relationship also came to an end. Following this, Intex jumped into bed with Linfoots and Linfoots supplied photographs for Intex’s website.
Orvec wasn’t happy about these photographs and sued Linfoots on two bases:
  • First, it claimed that some of the images supplied to Intex were those Linfoots created for Orvec. Supplying them to Intex was, claimed Orvec, a breach of an implied term in Linfoots’ standard terms and conditions: the implied term gave Orvec a perpetual and exclusive licence under the copyright in the photographs.
  • Second, by using the images Intex was passing itself off as Orvec. Linfoots – the only defendant in this action – was liable too as it had created an instrument of fraud or because it had procured Intex’s passing off.
Sadly for Orvec, both of these claims failed. Aside from the law, the claims really suffered on the facts and evidence. Orvec only succeeded in showing that Linfoots had supplied Intex with a single image (of a BA pillowcase) which was originally supplied to Orvec (it appears there were more, but they were only raised at the start of trial and the judge thought it unfair to let them in). Orvec’s evidence was lacking in other respects as well.


Was there an implied term granting Orvec exclusivity and so a breach of contract by Linfoots? No…
On the question of the implied term, HHJ Hacon found Lord Hoffmann’s comments in Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10 (a judgment of the Board of the Privy Council) instructive. Lord Hoffman noted that the court has no power to improve a contract or introduce terms to make it fairer or more reasonable. Its task was to work out what the contract meant:


“…It follows that in every case in which it is said that some provision ought to be implied in an instrument, the question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would reasonably be understood to mean…. this question can be reformulated in various ways which a court may find helpful in providing an answer – the implied term must "go without saying", it must be "necessary to give business efficacy to the contract" and so on – but these are not in the Board's opinion to be treated as different or additional tests. There is only one question: is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?”
Although cautious about adding a factor into this test, HHJ Hacon felt that the simplicity or complexity of the alleged implied term was important:


“…I think that the more complex the putative term, the less likely it is that the reasonable person would take it to be an implied part of the contract. As a rule terms with detailed formulations will either be present as an express term or not at all. A usual characteristic of an implied term is that it is simple.”
Proboscis monkey says: "Always provide
for copyright in your agreements"
Linfoots’ standard terms and conditions were short and sweet – nine sentences long. The essence of the alleged implied term was that Orvec had an exclusive licence to the photographs such that Linfoots couldn’t supply them to anyone else. The high point of Orvec’s argument here was that some of the photographs included its trade marks and/or the livery, trade marks and logos of Orvec's airline clients. As Linfoot (or any third party) could not have a legitimate reason to use such photographs, Orvec must have been impliedly granted an exclusive licence to them. It should also follow, contended Orvec, that the same term was implied in respect of other photographs not showing the trade marks of Orvec of its customers.


There is a force in the first argument – a trade mark owner who pays a photographer to take pictures of his trade mark-bearing products would be shocked to find the photographer selling them on to other parties – although he may have his trade mark rights to rely on to prevent this.
In considering it, HHJ Hacon drew a distinction between a designer creating a logo for a client (where the client would not expect the designer to be able to copy it or give it to others) and a photographer taking pictures of a product which bore the client’s trade mark. In the latter case, as just noted, trade mark rights would be in play and further it might be possible for the photographer to make use of the photographs with the trade mark removed or edited out (although this Kat is a little uncomfortable with that idea, and feels it would very much depend on the photograph and how the mark was redacted).


The judge then went on to note the need to take a minimalist approach in implying copyright licences: starting with a bare licence, progressing to an exclusive one only where appropriate, and finally to an assignment of copyright in the unusual case of Griggs Group Ltd v Evans [2005] EWCA (Civ) 11.
Taking all this together and applying a simple and minimalist approach to the alleged implied term, all the judge was willing to imply was a non-exclusive licence to Orvec to use the photographs. If anything more than that was to be implied, it would only be for the photographs in which Orvec’s trade marks featured (where as above the issue is a little trickier). However, Orvec had failed to demonstrate that any such photographs had been supplied to Intex by Linfoots.


Accordingly, with Orvec in possession only of a non-exclusive licence to the relevant photographs, there had been no breach of contract by Linfoots.
How about passing off by Intex in which Linfoots participated? Nope…


A successful passing off claim requires a demonstration of goodwill, proof of a misrepresentation and of damage. Orvec’s goodwill was not disputed.
As ever this claim came down to whether or not there had been a misrepresentation. Orvec claimed the following misrepresentations:


(1) "Intex's use of the Images provides customers and potential customers with the impression that these products [in the images] originate from Intex when, in fact, they originate from the Claimant."
(2) "It also provides customers and potential customers with the impression that the customers identified by their trade mark, logo and trade dress are Intex's customers when, in fact, they are the Claimant's customers."
Orvec relied upon Bristol Conservatories Ltd v Conservatories Custom Built Ltd [1989] RPC 455, which establishes the principle that where a defendant represents the claimant's article as being the product of his own efforts and skill, this may be an actionable misrepresentation. Orvec argued that by showing on its website samples of products that were recognisably used in the cabins of various airlines, including a BA pillowcase, Intex falsely represented that (1) the products came from Intex when in truth they came from Orvec and (2) these airlines were customers of Intex when in truth they were not.


Chen-Chen the orangutan questions
the quality of Orvec's evidence
Orvec struggled to make good these claims on the evidence. The judge found that most of the products shown in the photographs had in fact been made by Intex. The evidence was less clear on one other, but the product shown was generic and gave no indication that it originated from Orvec. Further, the evidence was that most of the airlines represented were customers of Intex, so again there was no misrepresentation.
The high point this time for Orvec was in respect of the photograph of the BA pillowcase. BA was an important customer of Orvec and had never been a direct customer of Intex. Further, the fact that the pillowcase was used by BA would have been recognised by those in the industry reviewing the photograph on Intex’s website. However, the pillowcase had actually been made by Intex and then supplied to Orvec. Orvec then sold it to BA. So indirectly it was an Intex product and HHJ Hacon saw no misrepresentation in Intex using a photograph of it in these circumstances.


Thus Orvec failed to show any passing off by Intex. Without that, there could be no liability upon Linfoot for its involvement in that passing off and so the instrument of fraud and procurement claims were not considered further.
A weak claim doomed to crash?


It is always easy as a commentator to reflect on a failed case, with hindsight, and wonder why it was ever brought. But this Kat will do it anyway: one wonders here why the evidence was so poor – Orvec failed to get the right photographs into the case in the first place, leaving it to rely on a single image for most of the claim. This was notwithstanding that it was represented by solicitors and experience IP counsel (as was Linfoots). Orvec also relied in its passing off claim largely on products which Intex had actually made for Orvec, which its advisors must have known would make things much harder.
There is always more at play in these cases, and judgments never reveal the commercial factors involved in pushing an action to trial. But one gets the feeling that this case would have benefitted from a bit of reflection once the evidence had been compiled, and possibly an emergency landing thereafter.

On the other hand, perhaps Orvec should be given some sympathy - suddenly finding photographs made for it of its products on its competitor's website. Is the failing to stop that conduct a reflection on the way Orvec fought its case, or on the straightjacket imposed by English law's tort of passing off in the absence of a far more flexible tort of unfair competition?


Photographs courtesy of my holiday in the jungles of Borneo

1 comment:

Les Hurdle said...

ow about the composers and performers on all of the 'product' used on airliners……….they are NOT compensated accurately……….does anyone care?

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