High end skincare product brand LUMOS was not a registered trade mark, so when it encountered LUMOS nail care products, an action in “passing off” was its only legal recourse. But a case in passing off is notoriously difficult to prove. Did the skincare business buck the trend in this case? Emma Percival reports.
Topic: Brands
Who: Lumos Skincare Limited; Sweet Squared Limited; Famous Names LLC (a US company); Sweet Squared (UK) LLP
When: May 2012
Where: UK
Law stated as at: 10 May 2012
What happened:
The Patents County Court has found that the sale of nail care products by the defendants under the brand name LUMOS did not amount to passing off of these products as claimed by Lumos Skincare Limited, a company selling high end skincare products under the same brand name. Whilst the court confirmed that even very modest goodwill is capable of supporting an action for passing off, there was no evidence of misrepresentation in this case.
Passing off
Passing off is a tort that can be used to protect both registered and unregistered trade marks. Essentially, a trader must not sell their own goods under the pretence that they are the goods of another trader. The test has three main elements:
- the goods or services in question must have goodwill attached to them;
- there must be a misrepresentation on behalf of the defendant that will lead or is likely to lead members of the public to believe that the goods offered by him are in fact the goods or services of the other company. There is no need for the defendant to intend misrepresentation; and
- the claimant must suffer damage to the goodwill of the relevant goods and services as a result of that misrepresentation.
The claimant
Lumos Skincare Limited ("Lumos Skincare") is a distributor of skincare products including anti-aging serums and exfoliators.
The products were high end, retailing for £100 per bottle and were sold to consumers via an online shop.
The products were sold under the brand name LUMOS. The goodwill in this mark was assigned to Lumos Skincare in April 2010 by Lumos Products Limited ("Lumos Products"). The mark was not a registered trade mark and as such, Lumos Skincare relied on the goodwill generated in the mark by themselves and Lumos Products.
The defendants
Famous Names LLC manufactured and Sweet Squared Limited and Sweet Squared (UK) LLP distributed a range of nail care products online to nail technicians and other professionals in the beauty industry. In October 2010, a new product line was introduced consisting of nail polish products under the brand name FN LUMOS. Each bottle of polish sold for £10.
The dispute
Lumos Skincare, on becoming aware of the Lumos nail care range, brought an action for passing off against the defendants.
The defendants denied passing off on the basis that:
- Lumos Skincare's goodwill in the LUMOS mark was very small;
- the nail care products industry was sufficiently different to the skincare products industry such that there was no likelihood of misrepresentation; and
- the defendants' products were sold to professionals whereas Lumos Skincare's products were sold to end consumers and so there can be no likelihood of misrepresentation;
The defendants also argued that they used the mark FN LUMOS, not simply LUMOS. FN stood for "Famous Names", taken from the manufacturer's company name.
Decision of the Patents County Court
The judge dismissed Lumos Skincare's passing off claim as follows:
Goodwill
The judge concluded from the evidence that there had only been a very modest use of the LUMOS mark by Lumos Skincare and Lumos Products as at October 2010. Lumos Skincare was selling approximately 100 bottles of branded products per quarter. These figures were small both in absolute terms and as a proportion of the skincare industry, estimated to have generated revenue of one billion pounds in 2010. Lumos Skincare was only targeting a small part of the total skincare market as it sold very high end anti-ageing products. As such, its reputation did not extend very far beyond those who dealt directly with it.
In addition to its limited reputation, only a very modest goodwill had been generated in the LUMOS mark in relation to skincare products as at October 2010. This goodwill had related only to the high end anti-aging products niche within that market. The judge did however confirm that even a very modest goodwill could support an action for passing off as previously seen in Stannard v Reay [1967] RPC 589 and Stacey v 2020 Communications [1991] FSR 49.
Misrepresentation
Whilst the goodwill in the LUMOS mark, although small, could still support an action for passing off, the judge found that there was no misrepresentation by the defendants for the following reasons:
- as already established, the LUMOS mark had only a very modest reputation and goodwill, limited to high end anti-ageing products in the skincare industry. The effect of this was to substantially limit the number of people in a position to whom the defendants' activities could amount to a material misrepresentation;
- the judge agreed with the defendants' argument that a clear division exists between the skincare industry and the nail care industry, although both formed part of the general beauty industry and there were some trade outlets which offered both products and/or services. Evidence showed that this division was recognised in the industry's own classification tools, in trade magazines, and in the way in which exhibitions were organised; and
- the judge referred to the case of Neutrogena Corporation v Golden Limited [1996] RPC 473. This case illustrates that a low percentage share of the overall market does not prevent a claimant from succeeding in passing off, provided that a substantial number of members of the public would have been misled into purchasing the defendants' product in the belief that it was the claimant's product. The judge said that Lumos Skincare had failed to present the strength of evidence necessary to establish that customers were confused by the use of LUMOS by the defendants. From the few emails submitted in evidence, the judge said that it was unclear whether the contact was deceived or merely confused.
The judge said that he had not found it necessary to rely on the distinction between professional and retail trade, which he doubted would have been sufficient to avoid misrepresentation if the parties had been operating in the same market. He also stated that he had placed no weight on the use of the letters "FN" by the defendants as countering the likelihood of any deception as, in his view, the defendants' products would simply be referred to as "Lumos".
Damage
Although no misrepresentation was found, the judge said that if he had concluded otherwise, he would have accepted that Lumos Skincare would have suffered at least injury to its trade reputation. An email submitted by Lumos Skincare in evidence showed that customers would have been less prepared to pay a premium for its highly priced anti-ageing products if they had believed that Lumos Skincare was also responsible for selling mass-market nail varnishes at a significantly lower price.
Why this matters:
This decision is a reminder to brand owners of the importance of obtaining registered trade mark protection for marks that they want to prevent others from using.
Passing off actions place a greater evidential burden on the claimant than actions based on registered trade marks. As such registration will avoid a situation in which a difficult passing off action is a brand owner's only enforcement option.
While the judge confirmed that it is possible for a claimant to succeed in a passing off action where there is modest goodwill in the mark and a small market share, they may struggle to adduce sufficient evidence that a substantial number of members of the public were misled where they have only a limited customer base.
