A Tort for Our Times

This article looks, in particular, at the tort of passing off to protect a sports person’s or other public personality’s rights.

Every age needs its heroes. Sportsmen and sportswomen are the superheroes of our times.  Although they make their names initially in the field of sports, these personalities have an impact far beyond the narrow confines of the sporting arena. Who can doubt that Muhammed Ali and Jesse Owens were not just sportsmen, but also cultural and political icons whose every word and action were followed and copied by millions around the world?

Where there is influence, there is money to be made. Although Ali and Owen probably did not make very much outside the field of sport, the same cannot be said of their modern brethren. Michael Jordan, David Beckham and Tiger Woods probably make more money from endorsing products and services, like Air Jordan basketball shoes, Police sunglasses and Tudor watches, than they make playing their respective sports.

The association of these sports stars with the endorsed products certainly helps in terms of sales. Therefore, the question which arises is what happens in a case of false endorsement, ie where it appears that there is an endorsement by a personality of a product when there is in fact none?

In the United States, there is what is known as personality rights. These are broad, well-accepted rights which allow an individual to exploit his ‘character’. For example, under the law of the State of Washington, it is expressly stated that every individual has the exclusive property right in the use of his or her name, voice, signature, photograph or likeness. Such a right may be transferred or licensed and does not expire upon death. Unauthorised use of personality rights is an infringement and actionable.

In Singapore and the United Kingdom, such rights do not exist per se. Until recently, ancillary rights were stretched to redress the situation. However, by definition such contortions often resulted in weak and unsatisfactory remedies. For example, the law of copyright and registered trade marks may provide some relief where a business has used, without licence, a copyrighted photograph of a personality or a registered trade mark which is in the likeness of the personality. Most unscrupulous businesses are, however, smart enough not to make such elementary mistakes. In the circumstances, cases of false endorsements are difficult to prevent.

Things change. In March of this year, in the case of Edmund Irvine & Tidswell Ltd v Talksport Ltd [2002] EWHC 367 (Ch) (13 March 2002) Chancery Division, High Court, Mr Justice Laddie used the tort of passing off to protect personalities in cases of false endorsement. In so doing, he overruled a line of cases going back to McCulloch v May [1947] 5 RPC 58, a 1947 English decision which refused to extend the tort to cover such a situation. In order to appreciate the context of the Eddie Irvine decision, one has to know the facts of the McCulloch decision and the principle behind it.

McCulloch was a famous presenter of a children’s radio show. He was also known as Uncle Mac. The defendant sold cereal under that name. This was certainly a case of false endorsement. The court held that in order to succeed in passing off, the plaintiff had to show a common field of activity. Since the plaintiff was not in the business of selling cereals, the court held that there could be no passing off of the plaintiff’s goods or business.

The need for a common field of activity was part of the historical baggage in the development of the tort. Passing off first came about to protect traders whose goods were being substituted by the goods of another. Laddie J cites Lord Halsbury in Reddaway v Banham [1896] AC 199 which provides the flavour and ambit of the tort a hundred years ago: ‘The principle of law may be very plainly stated, that nobody has any right to represent his goods as the goods of somebody else’. This was passing off in its original and narrowest form, ie the need to prove a goods-for-goods substitution. The common field of activity referred to in McCullough was in fact an extension of the Reddaway principle as there was growing recognition that there could be confusion and damage even though the defendant did not use the plaintiff’s mark on exactly the same goods which the plaintiff used the mark on.

The need to show a common field of activity meant that most cases of false endorsements were non-starters under the law of passing off; the personality is usually not in any way involved in the manufacture and sale of the products being endorsed. For example, while David Beckham lends his name and image to the sale of Police sunglasses, it cannot be said that there is a common field of activity between the parties.

This then was the state of the law at the time of the Eddie Irvine case. The plaintiff was a well-known F1 race car driver. The defendants ran a radio station which focused on sport. The defendants had the right to broadcast live the F1 Grand Prix World Championship. In this regard, the defendants released some publicity material which had a photograph of the plaintiff holding a radio to which the defendants’ former name ‘Talk Radio’ had been added. The plaintiff sued the defendants under the tort of passing off.

The defendants relied on the McCulloch case wherein, as stated earlier, the plaintiff had failed as he could not establish a common field of activity with the defendants. Clearly, there was no common field of activity in this case as well. Mr Justice Laddie felt that the plaintiff had been wronged but understood that he had to extend the tort to right the wrong.

He did this by making two points: firstly, he identified the underlying principle in the tort of passing off as the ‘maintenance of what is currently regarded as fair trading’. Secondly, he said that ‘passing off responds to changes in the nature of trade’. By making explicit these two points, Laddie J laid the foundations for the extension which was to come later.

The change in the nature of trade which Laddie J was concerned about was the advent of product endorsements by public personalities. The judge said the following: ‘Manufacturers and retailers recognise the realities of the market place when they pay for well-known personalities to endorse their goods. The law of passing off should do likewise. There appears to be no good reason why the law of passing off in its modern form and in modern trade circumstances should not apply to cases of false endorsement’.

So, there was clearly a commercial need to expand the tort beyond its original form. The problem was how the learned judge was going to justify the extension under existing principles. Laddie J did this by relying on cases of some vintage which held that passing off was intended to protect the property in goodwill. Two cases in particular were cited, ie Burberry’s v Cording [1900] 26 RPC 693 and the House of Lords’ decision in Inland Revenue Commissioners v Muller & Co’s Margarine Ltd [1901] AC 217. Laddie J went on to say that ‘... the purpose of a passing off action is to vindicate the claimant’s exclusive right to goodwill and to protect it against damage’. By focusing on goodwill as the source of the right rather than the narrow basis found in Reddaway (see above), the learned judge gave himself some elbow room to fashion a broad right whose guiding principle was the ‘maintenance of fair trading’.

The traditional form of damage in a passing-off case when parties are competitors in the same field of activity is lost sales. If members of the trade or public are confused by the presence of the defendant’s goods into thinking that they are the goods of the plaintiff, the plaintiff will suffer loss in sales and this is clearly actionable damage. However, this traditional form of damage will not occur where there is no common field of activity. Clearly, given that the tort will not be made out if one of its essential ingredients, ie damage or the likelihood of damage is missing, Laddie J had to scrounge for a head of damage which applied even when the fields of activity of the parties were different.

One such head of damage was recognised in the Champagne case, ie Taittinger SA v Allbev Ltd [1993] FSR 641. In that case, the defendant sold non-alcoholic drinks which incorporated the Champagne name. The action was dismissed in the lower courts because the plaintiffs could not show a likelihood of substantial damage as the plaintiffs would not lose sales.

The Court of Appeal disagreed and Sir Thomas Bingham MR stated the following:

I do not think the defendants’ product would reduce the first plaintiffs’ sales in any significant and direct way. But that is not, as it seems to me, the end of the matter. The first plaintiffs’ reputation and goodwill in the description Champagne derive not only from the quality of their wine and its glamorous associations, but also from the very singularity and exclusiveness of the description, the absence of qualifying epithets and imitative descriptions. Any product which is not Champagne but is allowed to describe itself as such must inevitably, in my view erode the singularity and exclusiveness of the description Champagne and so cause the first plaintiffs damage of an insidious but serious kind ... if the defendants’ product were allowed to be marketed under its present description, any other fruit cordial diluted with carbonated water could not be similarly marketed so as to incorporate the description champagne. The damage to the first plaintiffs would then be incalculable but severe.

Finally, Laddie J held in the Eddy Irvine case: ‘The law [of passing off] will vindicate the claimant’s exclusive right to reputation or goodwill. It will not allow others to so use goodwill as to reduce, blur or diminish its exclusivity’.

If goodwill is exclusive and the loss of exclusivity constitutes damage, there will be little need to show a common field of activity to fulfil the requirement of likelihood of substantial damage. In the past, the need to show a likelihood of such damage was a limiting factor in the application of the tort. It is probable, however, that this theory of exclusivity in relation to the issue of damage will be accepted only in cases where the plaintiff mark is extremely well known to the trade and public as was the situation in the Eddy Irvine case.

Finally, it is suggested that the common field of activity will play a role in the issue of confusion, ie the second element in passing off; the more disparate the fields of activities of the parties, the less likely that members of the public will be confused by the defendant’s representations into thinking his (the defendant’s) products or services originate from, are associated with or are endorsed by the plaintiff. The balance in the classical trinity of factors required to sustain the tort of passing off has shifted.

The law of passing off is now wider than it was before. It was expressly widened to take into account the changing needs of modern commerce, in particular the advent of product endorsements by public personalities. It is a given that the law in this area will continue to evolve as the nature of commerce changes. As the rate of change accelerates, passing off will always be playing catch up but this is as it should be. The common law never leads change; it follows it. Sometimes the gap between the needs of business and the remedies allowed by the law widens intolerably; in such situations, you need judges of great imagination and courage to bridge that gap. Mr Laddie J in Edmund Irvine v Talksport Ltd was such a judge.

M Ravindran
Ravindran Associates
E-mail: ravi@ipravi.com