Court of Appeal overturns Patents County Court in nail care passing-off claim
In Lumos Skincare Ltd v Sweet Squared Ltd ( EWCA Civ 590, June 6 2013), the Court of Appeal has overturned a decision of the Patents County Court, finding that the sale of Sweet Squared Ltd’s nail care products under the word mark FN LUMOS amounted to passing off in respect of certain skincare products sold by Lumos Skincare Ltd under the word mark LUMOS. In particular, the Court of Appeal found that Mr Recorder Campbell had erred in his application of the law to the facts and evidence in finding that the skin care and nail care markets were wholly distinct from each other.
Claimant Lumos, which sells skincare products under the word mark LUMOS in the United Kingdom, brought proceedings against the defendants, Sweet Squared Ltd, Famous Names LLC and Sweet Squared (UK) LLP (collectively Sweet Squared), which sold nail care products under the mark FN LUMOS, alleging passing off. Both parties sold their products directly to trade (eg, for use and sale to customers in beauty salons). In addition, Lumos sells its products in at least one retail establishment, as well as directly to consumers from its website.
Mr Recorder Campbell in the Patents County Court held that, whilst Lumos had established goodwill for the business to which its mark related, it had failed to make out that there had been any misrepresentation. He considered that the evidence suggested at best that there had been some confusion as to the origin of Sweet Squared’s products. In addition, the court held that there was a “clear division” between the skincare industry and the nail care industry, although both formed part of the beauty industry generally.
Lloyd LJ gave the lead judgment in the Court of Appeal, focusing on the Patents County Court’s findings in respect of misrepresentation. Lumos submitted that the question the Patents County Court should have asked was whether members of the public familiar with Lumos’ products would come into contact with the Sweet Squared’s products and, if so, whether the public would think the products came from the same source.
Lloyd LJ first considered who Lumos must show were misled. He noted that Lumos sold to end users via salons and clinics as well as directly through its website. Its customer base was not, therefore, solely salons and clinics. The Patents County Court had referred to Lumos’ reputation and goodwill being “substantially” limited to its small customer base and, according to Lloyd LJ, end users were therefore incorrectly excluded.
Lloyd LJ considered that, if skincare and nail care products were never sold or promoted in the same outlets, then there might be a case for saying that Lumos’ customers would not come into contact with Sweet Squared’s products or, if they did, they would not assume any connection between them. Moreover, Lloyd LJ said, the two products might be different, but they were “not far apart in market terms”. The evidence showed that such products are sometimes sold under the same brand names.
In Lloyd LJ's view, the customers for Lumos’ products, upon whom any misrepresentation might have had an adverse effect, must have been both the trade purchasers and end users, whether such end users paid for the use of the product by way of a treatment at a salon or whether they bought supplies themselves from a salon, retail outlet or via the Internet.
On this analysis, Lloyd LJ found that Lumos’ criticisms of the Patents County Court judgment were justified. As for the question of deception, Lloyd LJ found that, given the lack of side-by-side trading, the Patents County Court had incorrectly concluded that Lumos could not succeed without evidence from a witness who had been deceived. Accordingly, Lloyd LJ held that Lumos needed only show the likelihood of deception by inference and the appeal was allowed.
The Court of Appeal, as an appellate court, was very conscious of the constraints that it was under when invited to depart from a factual conclusion of the Patents County Court. However, Lloyd LJ said that the Patents County Court's conclusions were vitiated by its inconsistent treatment as between Lumos’ trade customers and the end users of its products, as well as by other errors, including the failure to take account of the use of the same brand name for skincare and nail care products. The decision was not, however, unanimous. Sir Bernard Rix dissented, saying that:
"It seems to me that the matter has in effect been retried in this court after a careful enquiry in the court of trial. [It was] not for an appeal court to interfere in […] jury questions save on good and plain legal grounds."
Leigh J Smith, McDermott Will & Emery UK LLP, London
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