Since 2004 the claimants Fayus, Inc and Anor had been selling “Ola Ola” African foods in the UK, so they sued when Flying Trade Group popped up with their OLA pounded yam. Canny FTG had got in first with a trade mark application, but this was only in 2010. Was this too late? Thomas Spanyol reports the verdict.
Who: (1) Fayus Inc (2) Fatai Adelaja Yusufu v Flying Trade group Plc
Where: Patents County Court
When: 20 September 2012
Law stated as at: 20 September 2012
A passing off action between companies selling African foodstuffs found its way before His Honour Judge Birss QC ('HHJ Birss QC') in the Patents County Court ('PCC').
Non-binding preliminary opinion
The Civil Procedure Rules that govern English legal proceedings give courts wide discretion powers on how to manage cases. In this case, HHJ Birss QC agreed to issue a non-binding preliminary opinion on this case as he had done in Weight Watchers v Love Bites  EWPCC 11, because (1) it was likely that this would help the parties settle, (2) the parties had set out their respective cases fully and clearly in their written statements of case and (3) both parties had agreed to this course of action.
The first claimant was Fayus Inc, the successor business to a company (the second claimant) which had been selling indigenous African and other ethnic food products under the brand 'Ola-Ola' in the UK since 2004. Their products included Ola-Ola pounded yam, Ola-Ola carotino oil and Ola-Ola plantain chips. The UK business had grown from £8,000 of annual sales in 2004 to over £400,000 in 2011.
The defendant, Flying Trade Group plc, was a UK company trading as 'Surya'. It sold a variety of ethnic food products, including pounded yam, bean flour and semolina, under a number of marks, including 'Ola-Ola'. The claimants believed that the defendant had started selling its products in the UK under the brand 'Ola-Ola' in 2011, but stealing a march on the claimants, Flying Trade registered OLA-OLA as a UK trade mark on 19 October 2010.
The claimants brought proceedings (i) for passing off and (ii) to declare the OLA-OLA trade mark registration invalid.
Passing off: the Jif Lemon test
As with all passing off claims, it was necessary for the claimants to show that the 'Jif Lemon' test (from Reckitt & Coleman Products Ltd v Borden Inc  RPC 341) had been met. In essence the Jif Lemon test is as follows:
1. there must be goodwill or reputation attached to the relevant goods or services.
2. the defendant must have made a misrepresentation to the public (whether or not intentionally) which led or was likely to lead the public to believe that the goods or services offered by him were the goods or services of the claimant; and
3. the misrepresentation must have resulted in damage to the claimants.
The claimants' case for passing off was:
1. Goodwill/reputation. The increase in sales of their Ola-Ola brand in the UK since 2004 indicated that there was goodwill attached to the products.
2. Misrepresentation/deception. Members of the public had been buying the defendant's goods thinking they were the claimants, thereby providing evidence of confusion and deception. Furthermore the defendant had copied the claimants' brand – both marks being in capitals in a yellow arc with a rounded black outline (the only differences being that the claimants' brand had letters in white with a black outline rather than in black, the ends of the arc were flat rather than curved and the defendant's logo had 'Taste of Africa' written underneath).
3. Damage. This was not discussed in the case report, however it is likely that evidence of this would have been produced by the claimant.
The claimants' case for the declaration of invalidity was:
1. that the defendant's OLA-OLA trade mark was invalid because it was liable to be prevented by the law of passing off (contrary to section 5(4)(a) of the Trade Marks Act 1994 (the 'Act')); and
2. that it had been registered in bad faith because the defendant had copied the claimants' brand, contrary to section 3(6) of the Act. The claimants highlighted two 2007 decisions by the Trade Marks Registry in which companies connected with the defendant had been denied trade marks for acting in bad faith.
The defendant's position was as follows:
The claimants did not have goodwill, because:
1. the claimants' sales figures were amplified and inaccurate, and the defendant put the claimants to proof;
2. the claimants' sales increase from 2010 was due to the defendant's products being stocked at large UK supermarkets and the claimants had in fact benefited from the defendant's marketing activities;
3. any goodwill in the brand belonged to Funbel Ventures (the UK distributor), not the claimants.
The trade mark registration had not been registered in bad faith because:
1. the defendant had evidence to show that they had designed the brand in late 2003 and not copied the claimants' brand; and
2. 'Ola-Ola' is a generic African term meaning 'all good', and so the claimants could not claim goodwill in it (this meaning of 'Ola-Ola' was disputed by the claimants in their reply).
HHJ Birss QC's preliminary opinion
A good chance of winning the passing off case
HHJ Birss QC opined that the claimants had a good chance of winning the passing off case because the defendant was using the name on the same type of goods as the claimants and the claimants' sales were likely to be high enough to give rise to sufficient goodwill. The case law stated that goodwill could be on a relatively small scale but must not be 'trivial' (Sutherland v V2 Music  EMLR 28). For example, in Stannard v Reay  RPC 589 a chip van that had been trading on the Isle of Wight for 3-5 weeks was held to have generated sufficient goodwill.
Whether or not Ola-Ola had a generic meaning in an African language, it has no meaning in English, so this did not prevent the claimants' goodwill subsisting in it.
HHJ Birss QC did not discuss the third limb of the Jif Lemon test- damage to the claimants- in his opinion.
A good chance of invalidating the trade mark
As the claimants had a good chance of winning the passing off case, there was accordingly also a good chance of their invalidating the defendant's OLA-OLA trade mark under section 5(4)(a) of the Act.
In terms of invalidating it under section 3(6) of the Act for bad faith, HHJ Birss QC pointed out that the defendant had not been able to produce evidence to back up its claims that it had designed the logo itself in late 2003. However the judge declined to comment specifically on bad faith, beyond stating that the claimants did not need to show this due to the likelihood of success under 5(4)(a).
Why this matters:
This case underlines the importance of applying to register a brand as a trade mark as soon as possible. If the claimants had done this in 2004, this litigation might well have been unnecessary.
The case is also a good example of the proactive approach to case management being taken by HHJ Birss QC in the PCC, helping to make it an increasingly attractive forum for lower value IP disputes. Damages in the PCC are currently capped at £500,000, and costs at £50,000. A new small-claims track has just been introduced (on 1 October 2012) to deal with claims under £5,000. The government has announced plans to increase this cap to £10,000 at an unspecified date.
While the success of the small-claims track remains to be seen, marketers taking larger claims to the PCC should remain aware of the potential cost savings that may be available by gaining a non-binding preliminary opinion with a view to settling.
It appears to be HHJ Birss QC's view that preconditions for an opinion are (i) sufficiently detailed statements of case and (ii) both sides agreeing to receive a non-binding opinion.
This article represents the opinion of the author and is not intended to constitute legal advice
Fayus Inc and another v Flying Trade Group Plc  EWPCC 43