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Status:

Positive or Neutral Judicial Treatment

*1 Ewing v Buttercup Margarine Company, Limited.

Court of Appeal 24 April 1917 24 April 1917

[1917 E. 42.] [1917] 2 Ch. 1

Lord Cozens-Hardy M.R., Bankes and Warrington L. JJ. Astbury J. 1917 April 24. 1917 March 2. Trade NameSimilarityProbability of ConfusionInjunctionBasis of Jurisdiction. The Court has jurisdiction to restrain a defendant from using a trade name colourably resembling that of the plaintiff, if the defendant's trade name, though innocently adopted, is calculated to deceive either (a) by diverting customers from the plaintiff to the defendant, or (b) by occasioning a confusion between the two businesses, e.g. by suggesting that the defendant's business is an extension, branch, or agency of or otherwise connected with the plaintiff's business. Decision of Astbury J. affirmed.

MOTION.
The plaintiff was a wholesale and retail provision merchant of Leith, Scotland. In 1904 he commenced opening retail shops for the sale of butter, margarine, eggs, tea, cream, and condensed milk, and carried on this retail business under the trade name of the Buttercup Dairy Company. He had now 150 shops in Scotland and seven in the North of England, the nearest one to London being at West Hartlepool, and he intended to come further south after the war. The business was well known to the buying public, the wholesale merchants, and the manufacturers and producers of the goods, and *2 was popularly called the Buttercup Company or the Buttercup. The total turnover was half a million sterling a year, and the sale of margarine was fifty tons a week. Goods were always bought in the name of the Buttercup Dairy Company, by which name the business was known in the markets. Two thirds of the goods came from Denmark and Holland and the residue from the United Kingdom. On November 15, 1916, the defendant company - the Buttercup Margarine Company, Limited - was incorporated as a private company. Its office was in Westminster, and, though the memorandum authorized both wholesale and retail trade in milk, cream, butter, margarine, &c., its main object and intention was to manufacture margarine by means of a secret process and to trade wholesale in the same. The capital was 20,000l. divided into 10,000 ordinary shares of 1l. each, which were all issued as fully paid in consideration of the purchase of the secret process, and 10,000 preference shares of 1l. each, of which 250 had been issued and 1s. a share paid. The three directors, two of whom were the signatories, had never heard of the plaintiff or his trade name, and adopted the name Buttercup Margarine Company, Limited, quite innocently, after ascertaining that there was no similar name on the Company Register. On November 23, 1916, the plaintiff complained of the name, and on January 31, 1917, after some preliminary correspondence, he issued a notice of motion to restrain the company and the directors

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from using or carrying on business under the name of the Buttercup Margarine Company, Limited, or any name colourably resembling the plaintiff's trade name, or otherwise carrying on business under any description calculated to produce the belief that the defendant company's business was that of the plaintiff or a branch or department thereof. The hearing of the motion was treated as the trial of the action, and was heard before Astbury J. on March 2, 1917. The plaintiff put in affidavits from well-known provision merchants in London, Somerset, and Yorkshire, showing that his business and trade name were well known and that the distinctive feature was the word Buttercup. They said that the defendant company's name would cause confusion and lead the public and the *3 trade to believe it was a branch of or connected with the plaintiff's business, and would cause him damage and inconvenience. They pointed out that a dairy company sometimes manufactured its margarine by means of an allied company - e.g., the Maypole Dairy Company manufactured its margarine by means of the Maypole Margarine Works, Limited, and it was known as Maypole margarine. In the same way, they said, the defendants' product would probably come to be retailed as Buttercup margarine. The defendants proved that they had adopted the name innocently and stated that they were wholesale manufacturers and did not intend to engage in any kind of retail business, so that they would not compete with the plaintiff. They pointed out that the plaintiff's nearest shop was at West Hartlepool, 250 miles from their factory, which was in London. They proposed to sell their margarine wholesale under a distinctive trade mark or brand in no way resembling the company's name, but they had not yet commenced totrade or advertise, nor had they selected the trade mark. They would not be able to start trading till the latter end of March, or perhaps later. They also proved that the word Buttercup coupled with a design was used as a trade mark by provision merchants of Liverpool in connection with butter, cheese, and other provisions, a London manufacturers' agent in connection with preserved milk, and the Dairy Outfit Company, Limited, of London, in connection with Buttercup colour for milk, cheese or butter. None of these traders, however, had Buttercup as part of their trade name, nor, apart from Buttercup colour, was there any evidence that their goods were sold as Buttercup. Hon. Frank Russell, K.C., and Ricardo, for the plaintiff. The defendant company's name, though innocently adopted, will cause confusion and ought to be changed: Hendriks v. Montagu. 1As they have not begun to trade or advertise, this will cause them no damage. The plaintiff is clearly entitled to relief. In the first place, the defendant company's name comprises the trade name of his goods - Eastman Photographic Materials Co. v. Kodak Cycle Co. 2; Premier Cycle Co. v. Premier *4 Tube Co. 3 - and puts a possible instrument of fraud into the retailer's hand - Lever v. Goodwin 4 - leading to passing off. Secondly, the name suggests that the defendant company's business is amalgamated with the plaintiff's business - Manchester Brewery Co. v. North Cheshire and Manchester Brewery Co. 5 - or is a branch or agency thereof: Lloyd's v. Lloyd's (Southampton), Ld. 6; Walter v. Ashton. 7 Even if this confusion of the two businesses does not result in passing off, it may involve the plaintiff in harassment or liability for the defendant company's acts, and if the defendant company were wound up the plaintiff might suffer in credit or reputation and a foreign consignment might be stopped. Cunliffe, K.C. , and Owen Thompson, for the defendants. The motion is misconceived. We intend to carry on a different business under a different name in a different locality and with absolutely different customers to those of the plaintiff. The jurisdiction in these cases rests either upon fraud or upon property; not that there is property in the name, but that the use of a name in which another carries on business will deceive and will affect property by diverting customers to the person taking the name. Where this is not the case there is no jurisdiction: Buckley on Companies, 9th ed. p. 14. The plaintiff must make out a probability of passing off by diversion of business: Jamieson & Co. v. Jamieson 8; Turton v. Turton 9; George Outram & Co. v. London Evening Newspapers Co. 10; Merchant Banking Co. of London v. Merchants' Joint Stock Bank. 11 Now the plaintiff obviously cannot claim a monopoly in the common word Buttercup: Aerators, Ld. v. Tollitt 12; and this is the only conceivable resemblance between his trade name Buttercup Dairy Company and our name Buttercup Margarine Company, Limited. In any case our name is

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sufficiently distinguished within J. & J. Cash, Ld. v. Cash 13; and as our margarine *5 will be sold under a distinctive brand not resembling our name, e.g., Purple Brand, the goods cannot possibly be confused in any one's hands. Again, we shall not commence trading till the latter end of March, by which time the plaintiff will have to put his own name on all trade catalogues, trade circulars, show cards, and business letters sent to any person in His Majesty's dominions: Registration of Business Names Act, 1916 (6 & 7 Geo. 5, c. 58) , s. 18. This Act was passed on December 22, 1916, before this action was commenced, and s. 18 comes into force on March 22. There cannot, therefore, be any possible confusion of the businesses in the United Kingdom or colonial markets. It is suggested that foreign vendors might be confused. But even if such confusion occurred it would be merely temporary, and in any case the principle is confined to confusion in the minds of the purchasers. No doubt a voluntary change of name would not have damaged us, but, having regard to the correspondence, we determined to stand on our strict rights and leave the plaintiff to make out his case. As this is not a motion for an interlocutory but for a perpetual injunction, the balance of convenience - e.g., the fact that a change of name will not damage us - is absolutely immaterial. Hon. Frank Russell, K.C., in reply. The note in Buckley on Companies, 9th ed. p. 14, is too narrow. The jurisdiction is not confined to fraud or diversion of business. It extends to cases of confusion between the two businesses: Kerly on Trade Marks, 4th ed. p. 548.

ASTBURY J.
(after stating the facts). In these circumstances the plaintiff contends that the defendant company's business, if and when carried on, will be calculated, by reason of the company's name, to lead to confusion, and possibly to other mistakes, and that in the present circumstances it would really in no sense handicap or damage the defendant company if another name were adopted for the purposes of the business which they have not yet begun to carry on. The present case is very near the line. The ground of interference by the Court in these name cases is that the use of the defendant company's name, or intended name, is calculated to deceive, and so to divert business from the plaintiff to the defendant, or to *6 occasion a confusion between the two businesses: Kerly on Trade Marks, 4th ed. p. 548. The text-book rightly adds that calculated to deceive is not to be limited to the date of the proceedings, but the Court will have regard to the way in which the business may be carried on in the future, and to its not being carried on precisely as carried on at the date of the proceedings. If the name, although not actually used by the plaintiff for the particular kind of goods to which the defendant has applied, or is proposing to apply it, is so identified with the name that the defendant uses that it may induce the belief that his goods are those of the plaintiff, or secondly that his business is an extension of, or otherwise connected with, the plaintiff's business, then the Court can grant relief. In Hendriks v. Montagu 14 James L.J. said: All the Court requires is to be satisfied that the names are so similar as to be calculated to produce confusion between the two companies - so calculated to do it that when it is drawn to the attention of those adopting the name complained of that that would be the result, it is not honest for them to persevere in their intention, though originally the intention might not have been otherwise than honest; and Cotton L.J. said that in the particular case before him the evidence was 15: That what the defendants will do, if they are not restrained, will cause confusion and will induce people, or be the means of inducing people, who desire to insure in this long-established society of the plaintiff's, to insure in the defendants' office instead. Now in the present case I have to decide, as a fact, whether on the evidence before me the use of the name Buttercup Margarine Company, Limited, is calculated to deceive by diverting customers or potential customers, from the plaintiff; or to occasion such a confusion between the two businesses as has been referred to in the various authorities.

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Prima facie the defendants will deal with a set of people altogether different from the plaintiff's customers. As wholesalers they will sell to shops, whereas the plaintiff's customers only purchase from shops. But a company that sells margarine under the title of the Buttercup Margarine Company, Limited, need not be surprised if the natural result follows that its margarine comes to be so *7 identified with its name that retail shops carrying on business in the districts served by the plaintiff's shops may honestly offer the defendant company's margarine for sale, as the Buttercup Margarine Company's margarine or, shortly, Buttercup Margarine. In these circumstances there is a reasonable possibility of the plaintiff's customers in those districts believing that the Buttercup margarine they have known in the past can now be obtained at other shops than The Buttercup Dairy Company. Further, I think that other confusion may arise. It is not an unknown thing for a dairy company selling butter substitutes to manufacture some of the products which it sells. For instance, the Maypole Dairy Company carry on business as manufacturers of margarine under the name of the Maypole Margarine Works, Limited, and just as that company's Maypole margarine can be purchased from the Maypole Dairy Company, so people may come to suppose that the plaintiff's Buttercup margarine can be bought from the Buttercup Margarine Company. Thirdly, although this is perhaps further off, the plaintiff largely deals with foreign vendors of margarine. It is possible that the defendant company may deal with the same firms for the purpose of purchasing the constituents from which they will make their product. It is possible that confusion may arise in that respect, and that in certain events the plaintiff might suffer in credit, or otherwise from that confusion which would be caused entirely by the similarity of the two names. For these reasons I think the plaintiff has made out a prima facie case that he will be, or may be, damaged within the meaning of the authorities if the defendant company is allowed to commence trading and to continue trading in its present name. I am to some extent influenced by the fact that no substantial injury of any kind can be caused to the defendant company, now that it knows all these facts, by incurring the small expense necessary to change its name. There is no prima facie reason whatever why it should either have adopted, or, now that the facts are known, desire to continue, the use of the word Buttercup in its title. If it is continued, damage to the plaintiff may be reasonably anticipated. If it is changed, no damage or injury can thereby result to the defendants. *8 On the whole, having regard to the evidence, the plaintiff has made out his right to the injunction he asks. (G. R. A.) The defendants appealed. The appeal was heard on April 24, 1917. Cunliffe, K.C. , and Owen Thompson, for the appellants. The appellants intend to carry on a different business in a different part of the United Kingdom and under a different name. There is no evidence that the respondent's goods are known as Buttercup goods. There is no suggestion of any fraud or that the appellants are attempting to get the respondent's business or that they will compete in any way with the respondent. The appellants have sufficiently distinguished between their business and that of the respondent. There is no reported case in which the Court has interfered by injunction unless there has been some deception or an appropriation by one person of another's business. Mere confusion is not sufficient to give a cause of action: Levy v. Walker. 16There must be something in the nature of fraud. This is not a case of similarity of names as between two limited companies where a less amount of confusion will entitle a plaintiff to succeed. In Ouvah Ceylon Estates, Ld. v. Uva Ceylon Rubber Estates, Ld. 17 Cozens-Hardy M.R. said: It must not be forgotten that the law gives a greater protection to companies in this matter than it does to individuals. The judgment of the Court below is based entirely on confusion. Astbury J. has stated that confusion is something less than deception. [BANKES L.J. Does not confusion develop into deception when the trader becomes aware of it?] The question here to be considered is what are the appellants threatening and intending to do? The Court has no power to interfere unless it is satisfied that the appellants are endeavouring to represent their business as that of the respondent. Astbury J. was misled by the statement referred to by him in his judgment from Kerly on Trade Marks, 4th ed. p. 548, that The ground of the interference of the Court is, that the use of the defendant company's *9 name, or its intended name, is calculated to

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deceive, and so to divert business from the plaintiff to the defendant, or to occasion a confusion between the two businesses. Relying on that passage and on Hendriks v. Montagu 18, he came to the conclusion that proof of confusion was sufficient to entitle the respondent to succeed. It is submitted that the learned author did not in the passage referred to mean that confusion alone was sufficient in an ordinary case but only in a case as between two limited companies. That this is so is shown by his quotation at p. 543 of a passage from the judgment of James L.J. in Levy v. Walker 19 as showing the principle on which a trade name is protected. The true view is that stated in Buckley on Companies, 9th ed. p. 14: The jurisdiction in these cases rests either upon fraud or upon property; not that there is property in the name, but that the use of a name in which another carries on business will deceive and will affect property by diverting customers to the person taking the name. Where this is not the case there is no jurisdiction. The respondent will now have to disclose his name under the Registration of Business Names Act, 1916 (6 & 7 Geo. 5, c. 58), s. 18. The respondent cannot suggest that he has a monopoly in the use of the word Buttercup, for at least three other firms use that word as part of their trade name. The intention of the appellants is to manufacture margarine for retail traders who will put their own names upon it. They will not, therefore, compete with the same class of customers as the respondent. In order to succeed the respondent must prove that there will be such confusion as will enable the appellants to deprive him of the business which would otherwise go to him and so lead to loss on his part. This he has not done. [LORD COZENS-HARDY M.R. referred to Day v. Brownrigg. 20] The mere fact that it would not put the appellants to much expense to change their name is not a sufficient reason for requiring them to do so. [They also referred to North Cheshire and Manchester Brewery Co. v. Manchester Brewery Co. 21] Hon. Frank Russell, K.C., and Ricardo, for the respondent, were not called upon. *10 LORD COZENS-HARDY M.R. This is an appeal from a decision of Astbury J. I agree with his judgment, and I think with every passage in it, with only one exception. He says that this is a case very near the line. In my opinion it is a perfectly plain and clear case, not very near the line, but well over the line. The plaintiff has since 1904 been carrying on a business dealing with margarine, tea and such articles, and he has upwards of 150 shops of his own in which he sells his own goods. He sells upwards of fifty tons of margarine a week. The name under which he has carried on business is Andrew Ewing, trading as the Buttercup Dairy Company. The business of the Buttercup Dairy Company is largely carried on in Scotland, and to some extent in the North of England, but not near London, or even the Midlands. It is a business which is extending southwards, and I do not in the least doubt that the Buttercup Dairy Company will, if so minded, extend the business into the South of England. The defendants are the Buttercup Margarine Company, Limited, and there are two directors added as co-defendants, though this for the present purposes does not matter. The company is one which was registered in November, 1916, and as soon as the plaintiff heard of it he complained. The defendants have never carried on their business up to the present time; but the application to the Court was made promptly and in time, with the result that the learned judge granted an injunction restraining them from carrying on business under the name of the Buttercup Margarine Company, Limited. They were at the beginning of the year engaged in building a factory, but up to the present day they have not made or sold an ounce of margarine. In a case like that, where the plaintiff is the owner of a business which has been established since 1904 and has a turnover of half a million a year, and must be regarded as an old-established business none the less because its actual sphere of operations is mainly in Scotland and the North of England, what should I expect the defendants as honest men or honest representatives of a newly formed company to do? I should expect them to say: We are very sorry; we were not aware of your existence in Scotland, but as you object to our name we will change it so as not in any way to

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interfere with you. Instead of doing that they assert their right *11 to use the name and file a mass of affidavits in support of their claim to do what they have threatened and continued to do; and they seek to justify their name on the ground that the arm of the Court is not long enough to reach a defendant who takes a name similar to that of the plaintiff, unless it can be shown that such name is calculated to deceive in the sense that a person desiring to be a customer of the plaintiff is induced thereby to become a customer of the defendant. And they say that there can be no deception here because they are wholesale people while the plaintiff is a retailer, that it is true that they have the fullest posssible power under the memorandum and articles of association to carry on a retail business, but that at the present moment they have no such intention. I should be very sorry indeed if the jurisdiction of the Court should be regarded as so limited. No doubt mere confusion due to some acts of the defendants would not be a cause of action - the case of Day v. Brownrigg 22 is a good illustration of that - but I know of no authority, and I can see no principle, which withholds us from preventing injury to the plaintiff in his business as a trader by a confusion which will lead people to conclude that the defendants are really connected in some way with the plaintiff or are carrying on a branch of the plaintiff's business. The evidence given on behalf of the plaintiff - the greater bulk of which has been read - is summed up in the passage in which he says that confusion which will be created in the manner hereinbefore suggested will undoubtedly operate to embarrass me in my business and cause serious injury damage and loss thereto. I cannot bring myself to doubt that what the defendants are threatening and intending to do would affect, and in all probability seriously affect, the plaintiff's business. We can only prophesy, because this action was commenced before the defendants' business was begun, but I cannot bring myself to doubt that serious damage to the credit and prosperity of the plaintiff's business would arise from the confusion caused by the defendant company deliberately and wilfully continuing to carry on business in a name so nearly resembling that under which the plaintiff is trading as to be calculated to deceive. In my opinion this is, as I have already said, a case not on the line, *12 but well over the line; and I think the judgment of Astbury J. was perfectly right, and that the appeal must be dismissed with costs. BANKES L.J. I agree. The plaintiff has been carrying on business for a long time under the style of the Buttercup Dairy Company, and the distinctive feature of that trade name is Buttercup. The defendants have recently incorporated themselves as a private limited company under the name of the Buttercup Margarine Company, Limited, and they intend to manufacture margarine under that name and deal with it as wholesale manufacturers under that name. It is not a case in which the defendants have actually commenced manufacturing or trading, and therefore one is not dealing with the actual results of their trading, but with the probable or necessary results of trading under the name they have adopted. A very large body of evidence has been filed on behalf of the plaintiff consisting of affidavits by men connected with first-rate companies dealing in the provision trade in a very large way; and all those affidavits are, as it seems to me, framed on the assumption that the defendants will manufacture margarine and put it upon the market in some way identifying it as the margarine of their manufacture, and it is for that reason that they speak about a confusion in the minds of the public, and a confusion which will lead the public - by which is meant the public purchasing margarine - into the belief that the plaintiff's and the defendants' businesses are one, or that there is some connection between the two. If the Court accepts the view put forward by these witnesses - and it seems to me to be the natural view - a case is plainly made out for the injunction; and it is perfectly immaterial for the defendants to say that they are wholesale dealers. What does this matter if they intend to pass their goods on to the market as being of their manufacture with the intention that they shall retain their identity until they reach the retail purchasers? Or what does it matter that the business of the plaintiff at the present time is mainly confined to Scotland and parts of the North of England? All that seems to me to be perfectly immaterial. Then when the defendants come to put their case before the Court it becomes quite plain that they do intend that their manufactures shall retain their identity, because Sir Thomas Salter *13 Pyne, who makes the first affidavit for the defendants, says that they will sell their goods not in the retail market but in the wholesale market and under a distinctive trade mark or brand not yet determined upon, but in no way resembling the defendant company's name. In making that assertion with regard to the trade mark or brand he appears to me to be significantly silent about the name of his company, and it seems to me perfectly impossible to associate the defendant company's name with the manufactured article without producing the confusion of which the plaintiff's witnesses speak. It seems to me, therefore, that upon those materials the plaintiff has abundantly made out his case, and that the learned judge was quite justified in coming to the conclusion that it was quite

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reasonable to anticipate that unless the injunction went there would be the confusion of which the plaintiff's witnesses speak. WARRINGTON L.J. I am of the same opinion. The plaintiff carries on a large retail general provision business under the title of the Buttercup Dairy Company. The defendants were incorporated in November, 1916, and they have a cash capital of 12l. 10s. - 250 preference shares of 1s. each - and have adopted as their registered name the title of the Buttercup Margarine Company, Limited. Looking at those two names, it seems to me obvious that a trader or a customer who has been in the habit of dealing with the plaintiff might well think that the plaintiff had adopted the name of Buttercup Margarine Company, Limited, as his own name for the purposes of the margarine branch of his business, or for the purposes, if you will, of doing what it is said the defendants are going to do, namely, to make their own margarine instead of buying it in the market. If that be so, it seems to me that the plaintiff has proved enough. He has proved that the defendants have adopted such a name as may lead people who have dealings with the plaintiff to believe that the defendants' business is a branch of or associated with the plaintiff's business. To induce the belief that my business is a branch of another man's business may do that other man damage in various ways. The quality of goods I sell, the kind of business I do, the credit or otherwise which I enjoy are all things which may injure the other man who is assumed wrongly to be associated with me. And it is just that kind of injury that what the defendants *14 have done here is likely to occasion. I think, therefore, the learned judge was perfectly right. LORD COZENS-HARDY M.R. The appeal will be dismissed with costs.

Representation
Solicitor for appellants: D. E. Bowen Davies. Solicitors for respondent: Neve, Beck & Kirby. (W. I. C.)

1.

(1881) 17 Ch. D. 638, 646.

2.

(1898) 15 Rep. Pat. Cas. 105.

3.

(1896) 12 Times L. R. 481.

4.

(1887) 36 Ch. D. 1.

5.

[1898] 1 Ch. 539; [1899] A. C. 83.

6.

(1912) 29 Rep. Pat. Cas. 433.

7.

[1902] 2 Ch. 282.

8.

(1898) 15 Rep. Pat. Cas. 169, 190.

9.

(1889) 42 Ch. D. 128, 136.

10.

(1911) 28 Rep. Pat. Cas. 308.

11.

(1878) 9 Ch. D. 560, 567.

12.

[1902] 2 Ch. 319, 323.

13.

(1902) 19 Rep. Pat. Cas. 181.

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14.

17 Ch. D. 638, 646.

15.

17 Ch. D. 651.

16.

(1879) 10 Ch. D. 436, 448.

17.

(1910) 27 Rep. Pat. Cas. 753, 756.

18.

17 Ch. D. 638.

19.

10 Ch. D. 447.

20.

(1878) 10 Ch. D. 294.

21.

[1899] A. C. 83.

22.

10 Ch. D. 294.

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