Interlego a.G. v. Tycoo Industries Inc. and Others

CACV000037/1985

Passing off - children's interlocking building bricks - defendants making identical copies - nevertheless none of the characteristics of the plaintiff's bricks was such as to point exclusively to the plaintiff - accordingly the plaintiff had proved no reputation in the get-up of the goods - the only reputation proved was that which inevitably arises when a manufacturer has previously been the sole producer of a new product.

BETWEEN

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Coram: Sir Alan Huggins, V.-P., McMullin, V.-P. & Cons, J.A.

Date of Hearing: 22 - 25 April 1985

Date of Judgment: 1 May 1985

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JUDGMENT

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Sir Alan Huggins, V.-P.:

1. These are appeals against the refusal of interlocutory injunctions and against an order giving leave to enter a judgment under 0.14. They were heard separately, but may conveniently be dealt with together in one judgment.

2. The Plaintiff brought an action for breach of copyright and for passing off and coversion in relation to children's building blocks manufactured and distributed by them. The Writ cited four Defendants, but we are concerned only with the 1st and 2nd Defendants, the 2nd Defendant being a Hong Kong subsidiary of the 1st Defendant, a United States corporation. The Plaintiff makes plastic bricks of various sizes and other "elements" such as roof tiles and wheels, which together form system. All the elements are interlocking by means of projecting studs which fit into apertures in the other elements. The Statement of Claim particularised fourteen elements as those complained of. The Defendants filed a Defence denying that the Plaintiff had any cause of action for breach of copyright and denying passing off and conversion. The Defendants counterclaimed for a declaration that they were entitled to manufacture in Hong Kong not only the fourteen elements the subject matter of the Statement of Claim but also fourteen other elements referred to in a letter from the Defendants solicitors to the Plaintiff's solicitors.

3. The Plaintiff took out a summons for interlocutory relief and the Defendants took out a summons under 0.14 in which they alleged that, in respect of the fourteen elements not the subject matter of the Statement of Claim, the Plaintiff had no arguable defence to their counterclaim. After this latter summons had been taken out, the Plaintiff amended its Statement of Claim to allege the passing off of all twenty-eight elements referred to in the solicitor's letter.

4. The Defendants concede that there is a triable issue as to breach of copyright in relation to fourteen elements. They contend that there is no triable issue on passing off in relation to any of the twenty-eight elements. They further say that on the principles established by American Cyanamid Co. v Ethicon Ltd. 1975 A C. 396 no case has been made out for interlocutory relief.

Passing-off

5. The greater part of the argument has been directed to the issue of passing off. There are three matters which the Plaintiff must prove:

1.    reputation

2.    confusion

3.    false representation.

The reputation which has to be shown is a reputation associated with the get-up of goods and not merely a reputation for the goods themselves.

"A manufacturer may be responsible for 90 per cent. of the sales to the public of a particular type of style of goods. That does not, in itself, begin to prove that a substantial number of the members of the public who buy those goods do so because they know of, or have any interest in, the particular source of the goods; or that they are attracted to buy those goods because of their knowledge or belief that they emanate from a particular source - a particular maker.'': per Megaw, L.J. in Jarman & Platt Ltd. v I. Barget Ltd. 1977 F.S.R. 260, 273.

A person is entitled to copy another's goods but not to present them to the public in a manner calculated to deceive persons who buy into thinking that they are the goods of that other.

6. What is "get-up"? It is the manner of presentation: Kerly on Trade Marks (7th Edn.) 570. Fletcher Moulton L.J. in J.B. Williams Co. v H. Bronnley & Co. Ltd. 1909 R.P.C.765, 773 (line 45) said:

"The get-up of an article means a capricious addition to the article itself, - the colour, or shape, it may be, of the wrapper, or anything of that kind; but I strongly object to look at anything, that has a value in use, as part of the get-up of the article. Anything which is in itself useful appears to me rightly to belong to the article itself. For instance, supposing that a firm had been, say for 20 years, the only firm to sell wooden chairs in which the natural wood was simply varnished, and not painted at all, that would not give them the slightest right to complain of a person putting on the market chairs simply varnished, even though they had been the only persons who had sold them for so long that such chairs might at first be supposed to be their manufacture. The reason is that the newcomer has not in any way imitated the get-up; he has only reproduced the article."

A typical example is the distinctive bonnets which have identified the makes of motor-cars from an early stage of their development. Such capricious addition may be made to a part of the article which is strictly of utility, such as the stick in William Edge & Sons Ltd. v William Niccolls & Sons Ltd. (1911) 28 R.P.C.582. Thus get-up includes the appearance of the goods themselves, but only in so far as that appearance is not dictated by the purpose for which they are to be used. The mere fact that a part of the goods is essential and is not merely an embellishment does not entitle a person to copy that part exactly, if he could reasonably have made it a different shape or size.

7. Mr. Rogers, for the Plaintiff, concedes that "where the 'get-up' consists of characteristics of the product itself, such as the shape and colour, of the article itself" proof of ownership of reputation is not easy, but he argues that it is a question of fact which cannot be decided in interlocutory proceedings. He relies on "the shape, size, colour, feel, thickness of the plastic, the studs, the lay-out of the studs and the tubes underneath" and the fact, which he asserts, that the Defendants are supplying sets of elements "with identical combinations". He also said that he relied upon "the system". One difficulty is that in his argument he confined himself entirely to the appearance of the goods themselves, as though they were presented to the public unpackaged. The affidavit evidence did not exhibit any package of the Plaintiff's goods. Apparently one of the Plaintiff's boxes was produced to the judge and was looked at by him (so that it must be regarded as having been admitted in evidence by consent), but we have not seen the package in its entirety: we were merely shown the empty box. It is accepted that the contents were visible through a sheet of clear plastic, but we do not know whether they could be felt or closely examined, nor do we know what (if any) other elements were included in addition to the twenty-eight elements to which the action relates.

8. The Defendants say that the Plaintiff cannot prove that it owns the relevant reputation, because the elements themselves have no characteristics which are not dictated by the use to which they are to be put and that, even when one disregards the packaging, there is nothing to which the Plaintiff can legitimately lay claim. In the language of Graham J. in Benchairs Ltd. v Chair Centre Ltd. 1974 R.P.C. 429, 436 (line 4):

"there must be something more than mere similarity between the goods themselves to amount to a representation constituting passing off."

and at p.435 (line 3):

"The essence of passing off is ...... the false representation by the defendant that his goods are those of the plaintiff ...... and the mere copying of the shape of the plaintiffs' article is not in itself such a representation."

The judge did at p.436 (line 11) suggest a possible qualification:

"...there might be a case where an article itself is shaped in an unusual way not primarily for the purpose of giving some benefit in use or for any other practical purpose, but in order purely to give the article a distinctive appearance characteristic of the particular manufacturer's goods."

He thought the possibility remote, and I am satisfied the present is not such a case. It seems to me that all the characteristics here were dictated by the purpose for which these blocks were to be used. The plaintiff can have no monopoly in the use of this particular type of plastic for making children's building blocks. The feel of the block is a necessary concomitant of the material used. The Defendants may have had a good reason for using the identical colours to those used by the Plaintiff (i.e. that they are bold colours generally used by manufacturers of children's toys) but a good motive cannot justify conduct designed to increase the Defendants' sales and rewards by adopting a course which may tend to mislead users: see Hoffmann-La Roche v D.D.S.A. Pharmaceuticals Ltd. 1972 R.P.C.1, 23 (line 38). On the other hand those colours are widely used and are not "fancy" colours which would clearly distinguish any building block as one manufactured by the Plaintiff. They cannot of themselves be said to give the elements "a highly distinctive appearance" as did the colours of the capsules in that case: Idem p.16 (line 22). The size of the blocks is no more distinctive of the Plaintiff than would, for example, be gauge "O" for model railway tracks. In Jones Brothers Ltd. v Anglo-American Optical Co. (1912) 29 R.P.C. 361 Fletcher Moulton, L.J. said at p.369 (line 5):

"To my mind the fact that two people use pieces of similar size of the same well-known suitable article has nothing whatever to do with get-up. That is the mere basis of the article."

The use of studs for interlocking building bricks is not something for which the Plaintiff has sought to claim a "reputation": before the development of plastics there were comparable interlocking rubber building bricks. The studs are located where they are because that is necessary to make them compatible with the Plaintiff's "system". The most superficial acquaintance with computers shows that compatibility is not evidence of passing off. Unless the Plaintiffs can lawfully claim a monopoly in the "system", it seems to me that the location of the studs is a characteristic dictated by necessity. What is less certain is whether the size of the studs and the design of the "tubes" underneath are elements are similarly dictated by the desire for compatibility. It is clear from the fact that, for example, "Edu-Brics" (another make of building brick) have slightly larger studs and a slightly different design for the "tubes" (differences possibly dictated by the different type of plastic used) that some variation is possible whilst retaining compatibility, though it is doubtful whether such variation would be enough to prevent confusion if the test were a simple one of identity. In the result I am not persuaded that the judge was wrong when he said :

"I would not find any distinctive features that can be said to amount to get-up....".

Although these blocks are utilitarian rather than ornamental, I think the position is the same as that in British America Glass Co. Ltd. v Winton Products (Blackpool) Ltd.) 1962 R.P.C. 230. Adapting the language of Pennycuick, J. at p.232 (line 37):

"There is no question here of traders being misled and the question is whether the public are likely to be misled into believing that the [bricks] manufactured by the defendant [companies] are manufactured by the plaintiff company. This is on the face of it, it seems to me, improbable since a member of the public buying [a toy building brick] of this nature is concerned only with what it [can be used to build] and is unlikely to care by whom it is made".

9. Mr. Rogers relied upon a dictum of Leonard, J. (as he then was) in Kemtron Properties Proprietory Ltd. v Jimmy's Co. Ltd. 1979 F.S.R. 86, 94:

"It is also, as I have sought to demonstrate, open to argument despite the observations of Fletcher Moulton, L.J. that the combination of a number of features each of which subscribes to utility and to nothing else can amount to 'get up' in the accepted meaning of that term. I am certainly not prepared to hold to the contrary in interlocutory proceedings."

That was not strictly necessary to his decision because the judge had, a few lines before that, found that there were peculiarities in the get-up of the plaintiff's fan that were not dictated by considerations of utility, although the general appearance of it was. There seems to have been no other judicial expression of doubt as to the correctness of the observations of Fletcher Moulton, L.J. and I do not think that a characteristic which subscribes to utility and to nothing else can , on the authorities, constitute get-up. In Hawkins & Tioson Ltd. v Flude's Carpets Ltd. 1957 R.P.C. p.8 Dankwerts, J. regarded Elliott & Co.Ltd. v Hodgson (1902) 19 R.P.C. 518 (the bull-nosed cigar case) as "the very limit of cases of this kind". However, as I understand it, the pull nose - although a utilitarian part of the product - was still a "capricious addition" not dictated by the purpose for which the article was made. Here I find no feature which could constitute a capricious addition.

10. I fully appreciate that the existence of reputation is one of fact and therefore not one to be decided upon affidavits in interlocutory proceedings. However, it is always a question of law whether there is evidence upon which a court can legitimately make a finding of fact, and I am satisfied that the Plaintiff here is unable to adduce any evidence upon which a court could find that the necessary reputation has been acquired.

11. In view of what I have said it ceases, in my opinion, to be relevant that these bricks were sold in boxes which are not suggested to bear any resemblance to each other apart from the fact that they have printed on them pictures of models built with the same kind of brick. It is the similarity of the bricks themselves which forms the basis of the Plaintiff's claim. I merely observe that the boxes bear words which emphasize the compatibility between Lego and Tyco products, thus implicitly negativing the suggestion of Mr. Rogers that prospective purchasers would say to themselves that Tyco must be a cheaper product made by the Plaintiff it self (In considering William Edge & Sons Ltd. v William Niccolls & Sons Ltd. supra I think it is important to remember that the disagreement of the House of Lords with the Court of Appeal turned in large measure upon the fact that "the goods in question are made up in penny packets, and are chiefly purchased over the counter by washerwomen, cottages, and other persons in a humble station of life". The purchasers of the present parties' products would be of a very different class - well educated and sophisticated and more likely to pay attention to any writing included in the get-up.) Whilst I do not think the Defendants can rely in this connection upon the advertising materials, which even more clearly draw a distinction between the products of the two manufacturers, it is relevant that the Plaintiff has not adduced any evidence of misrepresentation by the Defendants that their goods are the goods of the Plaintiff other than evidence which in truth shows only that their goods are identical to the goods of the Plaintiff.

"It is no good proving that a man has gone round saying: 'My goods are just like the plaintiff's and just as good as his'. That does not constitute passing off at all": per Harman L.J. in Terrapin Ltd. v Ariston Buildings Ltd. 1964 F.S.R. 218, 225.

It was not necessary for the Plaintiff on an interlocutory application to adduce evidence of actual confusion between its goods and those of the Defendants. However, in the absence of evidence of reputation and of misrepresentation I am driven to the conclusion that if any confusion has taken place it can only be the type of confusion which inevitably occurs when the first competitors appear on the scene to break - and to break quite legitimately - the monopoly previously enjoyed in the use of a new product: see My Kinda Town Ltd. v Soll 1983 R.P.C. 407, 422 (line 34).

Irreparable Damage and Balance of Convenience

12. It remains to consider whether the Plaintiff requires an interlocutory injunction to protect it pending the trial of the action. Mr. Rogers submits that the judge based himself upon a wrong premise when he said

"The present position is that the Defendants are not manufacturing in Hong Kong and at present do not intend to do so. Of the mould all but 2 have been removed from Hong Kong. Accordingly there is no immediate likelihood of damage being caused to the plaintiff."

It was common ground that the Defendants were manufacturing in Hong Kong with those two moulds but with those two only. The fact that the judge mentioned them shows, I think, that what he meant to say was that there was no immediate likelihood of irreparable damage's being done to the Plaintiff, because the greater part of the Defendants' production was being done elsewhere. However, there is still a possibility that the Defendants would increase their production here if not enjoined. The Plaintiff suggests that the real damage resulting from the Defendants' activities will be damage to its goodwill because, by undercutting the prices of the Plaintiff's basic blocks they will, first, lead the public to conclude that the Plaintiff is overcharging and, secondly, so reduce the Plaintiff's profits that it will be unable to maintain the research and innovation necessary to keep up interest in the Lego system. On the other hand, the Plaintiff contends that the Defendants would suffer no irreparable damage if the injunction were granted, because the effect would merely be that the Defendants would have to pay 15% more on the quantity of the goods which would otherwise be produced in Hong Kong. The Defendants replied that they have no intention of increasing their production here, but, above all, that the Plaintiff's delay in commencing and pursuing its action is conclusive proof that it has no substantial fear or irreparable damage. Moreover, behind all this is the fact that, on the available evidence, the Defendants' operation is tiny when compared with the business done by the Plaintiff: the Plaintiff has refused to condescend to particulars of its profits.

13. As to the delay, Mr. Rogers argues that the action was instituted at the earliest moment when sufficient evidence was available to the Plaintiff and he blames the Defendants for a substantial part of the delay in bringing the action to trial. I think he is right as to the institution of proceedings: whilst it is true that the Plaintiff had sufficient evidence in February 1984 on which to sue for passing off, we are now concerned with the action for breach of copyright and that required more detailed investigation to justify the issue of a writ. Nevertheless, it does seem to me that there was sufficient delay on the part of the Plaintiff at least to raise a doubt as to its fear of irreparable damage. However, neither side has convinced me that it would suffer irreparable damage and on that issue I would not disturb the finding of the judge.

14. Where lies the balance of convenience? The status quo is that existing during the period immediately preceding the issue of the writ: Garden Cottage Foods Ltd. v Milk Marketing Board 1984 A.C. 130, 140B. At that time the majority of the Defendants' moulds were being kept outside Hong Kong and only two were in use here. The injunction sought, being solely in relation to breach of copyright and not now to passing off, related to only fourteen of the twenty-eight elements being produced in Hong Kong, so that the effect of the injunction on the Defendants' business (and the consequent benefit to the Plaintiff) would be less than it would otherwise have been. I am not impressed by the argument that the sale of these blocks in the United States of America is seasonal. That may be so, but there is no evidence that the production in Hong Kong is likewise seasonal and it is with that production that we are principally concerned in this part of the action. Both sides have substantial assets and there is no reason to think that either will be unable to pay any damages eventually ordered. For my part I agree with the judge that damages would be an adequate remedy to the Plaintiff. I see no difficulty in quantifying those damages.

15. Accordingly I would not grant the injunctions sought and would dismiss the first appeal.

The 0.14 Appeal

16. It was suggested by the Plaintiff that the application for summary judgment on the counterclaim was, in effect, an abuse of the process, because it required the Plaintiff to adduce evidence in support of its claim at a stage when an application to strike out the writ as disclosing no reasonable cause of action would have been decided solely on the pleadings and would undoubtedly have failed. The truth is that the pleader made a slip in drafting the Statement of Claim and did not allege the passing off of all twenty-eight elements. That omission was remedied - albeit after the 0.14 Summons had been taken out - and the amendment took effect from the date of the writ. If the 0.14 Summons had been taken out after the amendment, I think it would have been oppressive, but it was not unreasonable to keep it afoot in case the judge concluded (as he did) that the passing off action was misconceived. It was on that ground that the Defendants hoped to obtain judgment, but their application was in a form which raised wider issues than that and it was this which made the application oppressive: the Plaintiff was called upon to bring forward its evidence. It is true that the dismissal of the interlocutory application upon the single ground leaves the claim in the action undiminished, whilst the judgment on the counterclaim is merely inconsistent with such a claim but equally does not diminish it. This procedural inconsistency can easily be cured and should not give us cause for anxiety.

17. Mr. Rogers submits that the oppressiveness of the application constituted "some other reason" (to use the words of 0.14 r.3(1)) why there ought to be a trial of the counterclaim. Had the application been decided upon any ground other than that upon which it was decided, I would have agreed. However, there has been no suggestion that other evidence could possibly be called in respect of the fourteen elements not said to be subject to copyright which might support the contention that there were other characteristics, in addition to those we have mentioned, which would have made them distinctive in such manner as to create a reputation. As it is, I think a just result in these very unusual circumstances has been achieved, and we should not interfere. This is one of those cases where a difficult question of law has been decided in interlocutory proceedings after full argument and we should not compel the Defendants to litigate that question further

18. I would dismiss the second appeal also.

Hon. McMullin, V.-P.:

19. I agree and there is nothing that I wish to add to what has been said by my Lord the Vice President in relation to both appeals.

Cons, J.A

20. I have come to the same conclusions as my Lord Huggins, the Vice-President and for substantially the same reasons. I do not think anything useful will be achieved by setting them out in less felicitous language. I agree that both appeals should be dismissed.

1st May 1985

Representation:

A.. Rogers, Q.C.7 A. Liao for Appellant.

R. Jacob, Q.C. & P. Garland for Respondent.