McCambridge Ltd v Joseph Brennan Bakeries

JurisdictionIreland
JudgeMacMenamin J.
Judgment Date31 July 2012
Neutral Citation[2012] IESC 46
CourtSupreme Court
Docket Number[S.C. No. 466 of 2011]
Date31 July 2012

[2012] IESC 46

THE SUPREME COURT

Denham C.J., Hardiman J., Fennelly J., Clarke J., MacMenamin J.

[S.C. No. 466 of 2011]

Between
McCAMBRIDGE LIMITED
PLAINTIFF/RESPONDENT
and
JOSEPH BRENNAN BAKERIES
DEFENDANT/APPELLANT

Tort law - Intellectual Property - Passing off - Similarity - Confusion - Damage to reputation - Damages - injunction - Wholemeal bread - Whether the trial judge had erred in law

Facts: The High Court had delivered judgment in proceeding concluding that the appellant had engaged in "passing off" of its wholemeal bread as being the product of the respondent. The High Court granted an injunction restraining Brennan from manufacturing, distributing or selling its bread product by means of packing similarly confusing. The Supreme Court considered whether the trial judge had erred in law, assessing nine heads of "similarity".

Held by the Supreme Court per MacMenamin J. (Denham CJ, Fennelly, Clarke, MacMenamin JJ concurring) that a claimant had to prove its reputation was such that a defendant's activity was likely to cause the public to believe that a defendant was providing a product made by the claimants which was causing damage to the claimant's property in the goodwill of the business. McCambridge had actually sustained some loss of trade by reason of persons who intended to buy McCambridge bread actually purchasing Brennan's bread. The loss was not notional. Passing off did not require an actual or potential diversion of business from a plaintiff to a defendant. It was open to the judge both to act on the evidence before him and to infer damage. The judge did not err in law in this regard. The tests for the claim had been satisfied. The appeal failed.

MacMenamin J.
JUDGMENT delivered the 31 st day of July 2012 by MacMenamin J.
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Background

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1. On the 25th November, 2011, the High Court (Peart J.), delivered judgment in these proceedings, holding that the appellant herein, (‘Brennan’), had engaged in passing off its wholemeal bread as being the product of the respondent (‘McCambridge’). The High Court judge granted an injunction restraining Brennan from manufacturing, distributing or selling its wholemeal bread product by means of packaging confusingly similar to the McCambridge product whether by way of colouring, layout, positioning of text or otherwise.

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2. The issues raised in this appeal are relatively limited. There is no real dispute between the parties as to the evidence which was before the High Court judge, or as to the legal principles applicable. The question for this Court is whether the learned trial judge erred in applying those legal principles in the light of the evidence before him. What follows is a description of the evidence before the learned High Court judge, an analysis of the legal principles and their application to the facts as found.

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The McCambridge Business

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3. McCambridge commenced business in 1945 as a grocery shop. The retail part of the undertaking traded up to 1985. The present company was incorporated in 1970, and took over some aspects of the old business, including the manufacturing and sale of stone-ground brown bread and soda bread. The bread market can be seen in a number of segments. One such segment of the market is in ‘wholemeal bread’. At 30% of this segment McCambridge is without doubt the leading trader.

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The Brennan Business

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4. Brennan is the market leader in retail bread sales in all categories in the State. It is a family owned company founded in the 1960s. It sells a wide range of bread products, including white and brown pans. Part of its activities includes selling brown soda bread. It has been doing this for the past 25 years. In general, the Brennan brand colours are red, yellow and white. The vast majority of its products are sold in packaging which displays these colours (see photograph 1). The one exception to this is its wholemeal bread product which can be seen second from the right at the bottom of row of photograph number 1.

8

The Packaging at Issue

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5. Uniquely, among all the other Brennan products, its wholemeal bread is sold in a resealable pack. The central issue here is as to the ‘get up’ and packaging of Brennan”s wholemeal bread. McCambridge contend that Brennan is passing off its product as being McCambridge”s. For convenience it will be of assistance in what follows to look also at photograph 2, which shows, on the left, the McCambridge product; at the centre, Brennan”s ‘old’ packaging prior to 2010; and at the right, the packaging which is the subject matter of this case.

10

6. McCambridge, in turn, has sold its wholewheat bread product in a resealable pack since 1998. The bag is made of plastic type material. Embossed on this is a centrally positioned printed block, predominately green in colour, but containing overhanging text in fancy script, comprising the words ‘John McCambridge’. This printed block acts as a ‘label’ on the packaging; the remainder of which is transparent so as to enable the consumer to see the product.

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7. Colours can be graded by what is termed ‘Pantone’ numbers and letters. The shade of colour green appearing on the McCambridge packaging is ‘Pantone 343C’. From the year 2003 onwards, the ‘McCambridge’ name on this block was in an arc, in printed lettering. Later, the package displayed the signature ‘John McCambridge’ in fairly small writing. The current package, introduced in the year 2008, contains the same signature, but in rather larger script. The block on this package contains writing underneath the signature. This says ‘Irish Stone-ground Wholewheat bread’. At the base of the block can be found the words ‘a tradition made fresh every day’. At the very top, on a band running across the package above a dotted line, can be found the words ‘yeast free, no added sugar, low fat’.

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8. The learned trial judge described the present McCambridge package as a ‘plastic resealable bag with distinctive graphic elements thereon such as a sheaf of wheat and the McCambridge name, as well as distinctive colouring, the most significant being a dark green panel appearing on the front of the bag’. He had no doubt that the public associated McCambridge with the wholewheat bread, and with the packaging of the shape, type and colouring just described. However, he did not make any finding that McCambridge had, or could have had, any proprietary right over that type of resealable bag, its shape, or the shape or size of the bread loaf inside. What may actually be legally protected is explained later in this judgment.

13

10. In the year 2010, Brennan”s market share in the wholemeal segment was no more than 6%. It wished to increase that share. It decided to put the task of further redesigning its package out to tender. A number of design agencies were invited to make a ‘pitch’ for this purpose. Brennan prepared what is termed a ‘pitch brief’ giving information to agencies which might be interested in taking on the work. Ultimately, Brennan settled on a firm called Mesh Design Limited (‘Mesh Design’). In the months of September to October, 2010, Mr. Ivan Hammond, Brennan”s then recently appointed head of marketing, carried on the discussions with Ms. Cora Murphy, Managing Director of Mesh Design. They considered the elements of the new packaging for the Brennan product in great detail.

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11. In what follows, it is important to emphasise that the learned trial judge held that Brennan”s misrepresentation had been innocent, albeit actionable. Nonetheless, clearly both Brennan and Mesh Design had McCambridge”s strong market position very firmly in view. One of the tasks assigned in the ‘pitch brief’ was to persuade consumers to switch from ‘the leading brand’, that is McCambridge. The evidence before the learned trial judge showed that the Brennans and Mesh Design representatives had the McCambridge packaging in mind during their many contacts. The issue was mentioned more than once. One of the earliest design proposals from Mesh Design actually contained, in the same sequence, some of the words to be found on the McCambridge packaging. Those words were ‘yeast free, no added sugar, low fat’. In the case of the Brennan packaging however, Mesh Design had added to these, the words ‘suitable for freezing’.

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12. Mr. Hammond and Ms. Murphy discussed the colour of the block to be placed on the new Brennan package. There was discussion whether the printed rectangular block on the package might be a lime green colour. Brennan decided against this, and ultimately chose a shade of green, (Pantone 7484C), which as, Mesh Design pointed out, brought the concept closer to the McCambridge packaging. Ms. Murphy was closely cross examined in Court in relation to other elements of the Brennan packaging before the learned trial judge. She denied that the cream print on their client”s package was an imitation of that to be found on the McCambridge bag. She contended that the printed element was more of a ‘buttery cream’ colour compared to that on the McCambridge bag.

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13. It is important to emphasise that some for of imitation of a market leader”s packaging is not unknown. It is part of competition. Competition between market players is not only lawful but to be actively encouraged. It makes for consumer choice. But unfair competition, in the shape of passing off a product as being one produced by another manufacturer is unlawful. Nonetheless, competitors sometimes configure the packaging of their product in a manner similar to that of market leaders. The question then arises as to whether the new competitor is merely ‘living dangerously’, or whether there is actually passing off. The dividing line between the two may be very thin.

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14. Brennan selectively launched...

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