McCambridge Limited -v- Joseph Brennan Bakeries, [2014] IEHC 269 (2014)

Docket Number:2011 2925 P
Party Name:McCambridge Limited, Joseph Brennan Bakeries
Judge:Charleton J.
 
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The High CourtCommercial Record number 2011 number 2925P Between: McCambridge Limited plaintiff and Joseph Brennan Bakeries Defendant Judgment of Mr Justice Peter Charleton delivered on the 27th day of May 2014 This judgment concerns the correct approach to adjudicating an account of profit when a defendant has been found liable for passing off. In this case, sliced brown bread. The account of profit remedy in preference to damages was at the election of the successful plaintiff McCambridge on being required by the defendant Brennan Bakeries to choose one or the other.It is argued by Brennan Bakeries as defendant that the correct approach to an adjudication of an account of profit in passing off should only to require the ascertainment and payment of such profits as were made due to the passing off; only such sales as are properly to be attributed to the tortious action, ruling out any gain made from those who were not confused but made a properly informed choice. It is argued by McCambridge as plaintiff that a court should require a defendant to pay profits in respect of all goods which tortiously were decked out and sold so as to resemble their product. This has the advantage of simplicity, since all profits made on this brown bread by the defendant from the commencement of the offending packaging would become those of the plaintiff. Peart J has held this passing off to have been unintentional; McCambridge Ltd v Joseph Brennan Bakeries [2011] IEHC 433. Since the product in question was sold by the defendant Brennan Bakeries for some years in a much different packaging prior to them marketing the brown bread in new packaging that closely resembled that of the plaintiff McCambridge, the appropriate approach to an account of profits is argued by the defendant Brennan Bakeries to be the measure in the jump in their trade attributable to that firm’s trespass on the plaintiff’s good will. This carries the requirement that a more precise measurement would have to be taken of what proportion of the general public were likely led astray by the passing off; and might require the Court to hear expert evidence beyond comparative retail sales figures. The distaste of this approach is flagged by the reference in the papers to an expert for the defendant who apparently proposes to argue that increased competition due to similar packaging between the parties led to a marked jump in brown bread consumption in Ireland and profited all bakers. But, the thought experiments of prospective witnesses must be left aside in attempting to apply what the law requires.Here are the questions for the Court as set out in the order of Kelly J of 27th January 2014:Is the defendant obliged to account to the plaintiff for:(a) such portion only of the profits (if any) of the defendant … from the sale of wholewheat bread in the packaging … which were attributable to their infringing conduct only so that the court is required to engage in an exercise of apportionment (as contended for by the defendant); or(b) all profits of the defendant … from the sale of wholewheat bread in the packaging (as contended for by the plaintiff)?History of the proceedings The plaintiff McCambridge are a family firm founded 1945. Over many years they have produced a stone-ground yeast-free brown bread that has no added sugar and boasts of “a nutty wholesome texture and taste”. The recipe is a secret. Since 1980, it is sold in a see-through rectangular plastic packaging using a distinctive green dominant colour with the manufacturer’s name in white cursive writing. The defendant Brennan Bakeries are a dominant player in the Irish bread market and boast that they produce, as they say, “today’s bread today”. Up to 2010, the plaintiff McCambridge achieved about 30% of sales of brown bread on the Irish market. The defendant Brennan Bakeries, in contrast, had captured only 6%. For some years, however, the defendant Brennan Bakeries was producing a kind of nourishing wholemeal brown bread that was in a similar rectangular shape to that of McCambridge and was, like that, pre-sliced. The brown bread of Brennan Bakeries then was in a completely different packaging to that of McCambridge. In January 2011, the defendant Brennan Bakeries introduced new packaging that was very similar to that of the plaintiff McCambridge. Because of the dominance of Brennan Bakeries in the general bread market, these were introduced into a wider range of stores than had been penetrated by the plaintiff McCambridge. Initially, the confusingly decked out brown bread of Brennan Bakeries was offered only in some locations in Dublin and in Cork. Marketing rolled out the product over the entire country thereafter and was completed by April. By letter dated 18th of March 2011, the plaintiff McCambridge warned the defendant Brennan Bakeries that it was passing off its brown bread and infringing the goodwill of McCambridge. This action commenced about two weeks later on 30th of March. It was entered into the commercial list by Kelly J on 9th of May. The trial took place before Peart J on 21st of July and in consequence of the speed of disposal, there was no application for an interlocutory injunction. Judgement was given by Peart J holding for the plaintiff McCambridge on 25th of November 2011 and the consequential order of the court was made on 2nd December; McCambridge Ltd v Joseph Brennan Bakeries [2011] IEHC 433. That order restrained the defendant Brennan Bakeries from:(a) passing off its bread as bread manufactured and/or placed on the market … by or with the authority of the plaintiff;(b) advertising, marketing, promoting, offering, supplying or selling bread by means of packaging confusingly similar (whether as regards colouring, layout, positioning of text or otherwise) to that of the plaintiff…(c) advertising, marketing, promoting, offering, supplying or selling bread by means of the packaging… appended as schedule 2 of the plenary summons.The order was stayed for seven days. On 9th December 2011, the Supreme Court granted a stay on the injunction pending the appeal. Ultimately, the appeal was heard in July 2012 and on the 31st of that month judgment was issued by the Supreme Court, McMenamin J for the majority upholding the finding of the High Court. Fennelly J dissented; McCambridge Ltd v Joseph Brennan Bakeries [2013] IESC 46. What then happened was that for a period of a week or so in August 2012, the defendant Brennan Bakeries were required to sell their brown bread in plain see-through plastic packaging. Then a new getup very different to the offending packaging was devised under which the bread has been sold every since. When the issue of damages or compensation started to seem important, the defendant Brennan Bakeries applied to put in a late lodgement in respect of thereof. This was refused by Kelly J; McCambridge Ltd v Joseph Brennan Bakeries [2013] IEHC 569.As every judge is aware, even basic factual circumstances can be diffracted through legal argument and expert opinion so that what is in plain truth a stone can become as amorphous as sand. There are some basic figures here which seem to be, without judging the matter, of primary importance. With the infringement through passing off, the sales of Brennan Bakeries’ bread went from 30,000 units per month to 40,000 units. When plain packaging was substituted, sales decreased to 37,000 units. The tort of passing off requires that a plaintiff prove that by the exercise of commerce, including advertising and marketing, a particular name or get up became associated with the choice of its product in the marketplace so that consumers associated the excellence of the goods or services with a brand or packaging. Here, it is proposed to argue that the brown bread of the defendant was sometimes sold in locations different to that of the plaintiff and that consequently, there would be no mistaken purchase in those instances. That submission perhaps mistakes the law. At issue is the marketplace. In respect of products advertised on a nationwide basis, the attributes of the goods or services will be in the mind of potential consumers throughout Ireland. Fine arguments as to whether consumers were aware of the branding due to a plaintiff’s product only being available in particular shops should perhaps yield to a broad analysis as to how there was an increase in the tortfeasor’s sales on it passing off its own product as that of another. If it be the case that the proper approach to an account of profit as a remedy for passing off is the extent of the infringement, then it appears is very much a preliminary view that whereas from the period January 2011 to August 2012 the defendant Brennan Bakeries made a profit of €608,481 arising from the sale of the whole wheat bread in the offending packaging, they would otherwise have had sales of only three quarters of what that infringement achieved; and wrongful profit accordingly was boosted by about a third.Election between damages and account It is inherent in the tort of passing off that an election may be made by a wronged plaintiff between a remedy in damages and an account of profit; House of Spring Gardens Ltd v Point Blank Ltd [1984] IR 611 per Griffin J at 706 citing Peter Pan Manufacturing v Corsets Silhouette Ltd [1964] 1 WLR 96 at 106 per Pennycuick J and see Edelsten v Edelsten (1863) 46 ER 72 and Weingarten Brothers v Bayer & Co [1904-07] All ER Rep 877 at 880 per Lord MacNaghten. To this election there appears to be one exception. Where an injunction is sought but is not granted on the discretionary basis that damages are an adequate remedy, the plaintiff will be left without the choice of an account in compensation for the tort. In Falcon Travel Ltd v Owners Abroad Group plc trading as Falcon Leisure Group [1991] 1 IR 175 the defendant was a major tour operator abroad. On penetrating the Irish market the defendant discovered that it had a similar name to plaintiff the retail travel agent in...

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