Infringement - Sale of reconditioned goods

Schutz (UK) Ltd and another v Delta Containers Ltd and another: Chancery Division (Mr Justice Briggs): 5 July 2011

The claimant was a company manufacturing bulk containers (IBCs).

Each IBC consisted of a metal cage, into which a plastic bottle capable of holding 1,000 litres of liquid would be placed. The bottles wore out faster than the cages.

The defendant company had established a business in which it would fit a new bottle, not necessarily of the claimant's manufacture, to the cages (the altered IBCs). The claimants displayed their name and logo conspicuously on the cages and less conspicuously on the bottles.

The defendants used a disclaimer sticker on each IBC. The claimant issued proceedings against the defendant, on the ground that the claimant's business activities constituted trade mark infringement and passing off.

The claimant contended that when the defendant fitted an IBC made by the claimant with a bottle made by another company, it was infringing the claimant's trade marks in relation to the bottle and the IBC as a whole.

It further claimed that the defendant's conduct was sufficient to constitute passing off of its altered IBCs as the IBCs of the claimant, by giving the impression that the bottle was manufactured or approved by the claimant and that the IBC as a whole was the claimant's product.

The defendant contended that the continued appearance of the claimant's trade marks on the IBC constituted no more than the legitimate use of the trade mark in relation to the cage alone, and was neither a use nor a misrepresentation in relation to the bottle or the IBC as a whole.

The defendants further contended that their use of disclaimers was sufficient to avoid the allegation of infringement of the claimant's trade mark.

They submitted that where applicable their customers were fully aware that they were purchasing an altered IBC, and that where the IBCs were sold on, the eventual purchasers were indifferent to the manufacturing source of the different component parts of the IBC.

The claim would be allowed.(1) On the facts, the average end user of an IBC would be likely to conclude that the claimant's trade marks on the cage were being used in relation to the bottle as well and hence the entire IBC. Were the IBC to fail, it was likely that they would consider that the claimant was to blame.

The appearance of the claimant's marks on the cage, alongside a disclaimer, would be such to create in the average consumer the impression that the marks were being used in relation to the IBC and the bottle, rather than merely the cage. Consequently, the claim of trade mark infringement would be made out in relation to the bottles and the IBCs as a whole. (see [100], [103]-[110] of the judgment).

On the facts, infringement of the claimant's trade mark had occurred (see [110] of the judgment). OFT v Officers Club [2005] EWHC 1080 applied.

(2) A successful claim in passing off did not require any demonstration that the defendant's product would be of lower quality or more prone to failure than the claimant's product. Likelihood of damage could lie in the fact that a purchaser would be likely to blame the wrong party for a failure or defect if it were to occur (see [119] of the judgment).

On the evidence, passing off had been proven. Were any defects to arise in the IBCs sold by the defendant, they would most likely be blamed by users on the claimant. On the evidence, none of the disclaimers used by the defendant would be sufficient to remedy that misrepresentation.

It would not matter whether there was a level of choice for end-level users as to which IBCs they received, nor would it matter whether the eventual consumers had any preference as to which supplier of IBCs was used (see [120], [122]-[123] of the judgment).

On the evidence, passing off had occurred (see [124] of the judgment).

Associated Newspapers plc v Insert Media Ltd [1991] 3 All ER 535 applied; Reckitt & Colman Products Ltd v Borden Inc [1990] 1 All ER 873 applied; Warnink (Erven) BV v J Townend & Sons (Hull) Ltd [1979] 2 All ER 927 considered.

Lindsay Lane (instructed by SNR Denton) for the claimants. Aubrey Craig (instructed by Clough & Willis) for the defendants.