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Passing-Off, Goodwill and False Advertising: New Wine in Old Bottles
Published online by Cambridge University Press: 16 January 2009
Extract
Commentators upon the English common law relating to the protection of trade symbols have frequently remarked the uncertainty concerning the true scope of the action for passing-off: its place in the scheme of English tort law has been said not to have been finally determined, and its capacity for growth not to have been exhausted. It is true that this uncertainty has not prevented greatly increased use of the action in recent years; but this is no reason to be complacent, for the judicial extensions of liability under this head owe more to the manipulation of verbal formulae than to a clarification of its foundations. Inconsequence, as passing-off has come to be employed as the vehicle for novel assertions of right-such as those of groups to a shared symbol, of foreign traders to international reputations that have preceded them to these shores, or of pop stars and other ephemera of our culture to the value of their names and likenxsesses in the marketplace—the risk of important interests being ignored, simply through failing to be recognised, has increased rather than decreased.
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References
1 Morison, W. L., “Unfair Competition and ‘Passing-Off,’” (1956) 2 Sydney L. Rev. 50, 53.Google Scholar
2 Fleming, J. G., The Law of Torts (5th ed., 1977), 700Google Scholar; Cornish, W. R., Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights (1981), (herinafter, “Cornish”), 474–175.Google Scholar
3 Earlier, judges used to be more cautious about applying passing-off “to analogies which fell outside the classic cases”: Cornish, 473.
4 This is the application discussed in this article.
5 Maxim's Ltd. v. Dye [1977] F.S.R.364;C. &A. Modesv. C. & A. (Waterford) Ltd. [1978] F.S.R. 126. These cases have been criticised in Athletes Foot Marketing Associates Inc. v. Cobra Sports Ltd. [1980] R.P.C. 343, and their effect severely limited in Anheuser-Busch Inc. v. Budejovicky Budvar N. P. [1984] F.S.R. 413.
6 Lyngstad v. Anabas Products Ltd. [1977] F.S.R. 62; Wombles Ltd. v. Wombtes Skips Ltd. [1975] F.S.R. 488; Tavener Rutledge Ltd. v. Trexapalm Ltd. [1975] F.S.R. 479.
7 This series of cases began with J. Bollinger S.A. v. Costa Brava Wine Co. Ltd. [1960] Ch. 262, [1960] R.P.C. 16; [1961] R.P.C. 116 (the “Chamapgne” case). Later cases include Vine Products Ltd. v. MacKenzie & Co. Ltd. [1969] R.P.C. 1 (the “Sherry” case). John Walker & Sons Ltd. v. Henry Ost & Co. Ltd. [1970] R.P.C. 489 (the “Scotch Whisky” case), HP. Bulmer Ltd. and Showerings Ltd. v. J. Bollinger S.A. and Champagne Lanson Père et Fils [1978] R.P.C. 79 (the “Babycham” case), and Testut Frères v. J. E. Lightbourne and Co. Ltd. [1981] F.S.R. 458 (the “Chablis” case).
8 Erven Warnink B. V. v. J. Townend & Sons (Hull) Ltd. [1979] A.C. 731, [1979] F.S.R. 397 (the “Advocaat” case).
9 This describes passing-off in its traditional form, before its scope was widened by recent developments. The use of the word “classic” in this connection is owed to Lord Diplock, in Advocaat: [1979] F.S.R. 397,400.See also Hoffmann-LaRochev.D.D.S.A. [1969] F.S.R.410.419. per Harman L.J.
10 [1979] F.S.R. 397, 405.
11 See, e.g., Winfield and jolowicz on Tort (12th ed., 1984), 544; Kerly's Law of Trade Marks and Trade Names (11th ed., 1983), (hereinafter, “Kerly”), §16–03, 320–321. It has been stated that “[t]he Advocaat case is the most authoritative pronouncement on the law of passing off in England”: Chablis, at 468; on the other hand, it has also been cautioned that the speeches in that case should not be treated as having statutory force, or as being “an exhaustive definition of the tort of passing off”: My Kinda Bones Ltd. v. Dr. Pepper's Stove Co. Ltd. [1984] F.S. R. 289. 297.
12 Cornish, 495.
13 Southern v. How(1618) Cro. Jac. 468, Poph. 143,2 Roll. Rep. 26; Dean v. Steel(1626) Latch 188. See Morison, above, n.l, at 54–55.
14 Reddaway v. Banham, [ 1896] A.C. 199,204: “nobody has any right to represent his goods as the goods of somebody else”; A. G. Spalding and Bros. v. A. W. Gamage Ltd. (1915) 32 R.P.C. 273, 284, per Lord Parker.
15 Advocaat [1978] F.S.R. 473, 481 (C.A.), per Buckley L.J., citing his own judgment in the Babycham case.
16 The tort of injurious falsehood places no such limits: Winfield and Jolowicz, op. cit., n.ll, 288–289; Sheperd v. Wakeman (1662) 1 Sid. 79.
17 Reddaway v. Banham, above, n.14.
18 Penney Inc. v. Punjabi Nick [1979] F.S.R. 26. So long as this is so, it is unnecessary that the plaintiff also be invoked as the manufacturing origin of the goods.
19 Mines v. Winnick [1947] Ch. 708.
20 White Hudson and Co. Ltd. v. Asian Organisation Ltd. [1964] 1 W.L.R. 1466.
21 Edge & Sons Ltd. v. Niccolls & Sons Ltd. [1911] A.C. 693.
22 Cadbury-Schweppes Pty. Ltd. v. Pub Squash Co. Pty. Ltd. [1981] R.P.C. 429, though it was held there that the use of the advertising campaign did not, in the circumstances, amount to a misrepresentation.
23 My Kinda Town Ltd. v. Soil [1983] R.P.C. 407 (the “Chicago Pizza” case).
24 Kerly, §§16–10, 16–11.
25 Powell v. Birmingham Vinegar Brewery Co. [1897] A.C. 710, 715.
26 The term was first used by Lord Westbury, in Wotherspoon v. Currie (1872) L.R. 5 H.L. 508, 521 (H.L.); Cornish, 479, n.30.
27 ibid, (“Glenfield” starch).
28 [1896] A.C. 199.
29 ibid., at 202.
30 [1895] 1 Q.B. 286.
31 This comprises the persons responsible for making purchasing decisions in relation to the defendant's product.
32 305 U.S. Ill (1938).
33 ibid, at 118. In England and in Canada, it was similarly held that the mark “Shredded Wheat” lacked secondary meaning and was therefore invalidly registered: “Shreaded Wheat” (1938) 55 R.P.C. 55, 271; (1940) 57 R.P.C. 137 (H.L.); Canadian Shredded Wheat v. Kellogg (1938) 55 R.P.C. 125.
34 In Chicago Pizza, it was held that the words “Chicago Pizza” were descriptive of a certain kind of pizza that had originated in Sicily and migrated to Chicago, and had not acquired the secondary meaning of a restaurant operated by the plaintiff: [1983] R.P.C. 407, 415, per Lawton L.J.
35 (1887)4 R.P.C. 473; (1891) 8 R.P.C. 125. This case does present difficulties of interpretation, but neither its procedural history, nor the issues presented to Kay J. at first instance, the Court of Appeal and the House of Lords, nor the reasons given by them for their decisions, are unclear enough to deserve the calumny heaped upon them by Lord Diplock in Advocaaf. [1979] F.S.R. 397, 408.
36 They had been used as such in the plaintiffs patent specification: (1887) 4 R.P.C. at 476, per Kay J.; (1891)8 R.P.C. at 130, per Cotton L.J., and at 134, per Lord Herschell.
37 As the plaintiffs counsel conceded, anybody who made fertiliser by the ABC process could call it Native Guano: (1887) 4 R.P.C. at 477, per Kay J.
38 ibid, at 475.
39 ibid, at 477.
40 (1891) 8 R.P.C. at 135. Also in the Court of Appeal, by Cotton L.J.: (1891)8 R.P.C. at 128.
41 103 Fed. 281 (6th Cir. 1900). This was a decision of an especially eminent court, comprising Circuit Judges Taft, Lurton and Day. See Judge Learned Hand in Ely-Norris Safe Co. v. Mosler Safe Co., 7 F.2d 603, 604 (2d Cir. 1925).
42 103 Fed. 281, 285 (6th Cir. 1900).
43 ibid
44 “Malice” is required for liability, which means the defendant must either have known his statement to be false, or must have made it for the purpose of injuring the plaintiff: Wills United Dairies v. Robinson [1957] R.P.C. 220, 237, per Stable J.
45 Royal Baking Powder v. Wright, Crossley (1901) 18 R.P.C. 95, 99, per Lord Davey. This requirement has been relaxed by the Defamation Act 1952, s. 3(l).
46 Johnston v. Orr-Ewing (1882) 7 App. Cas. 219, 233, per Lord Watson.
47 Blanchard v. Hill (1742) 2 Atk. 484.
48 1838) 3 My. & Cr. 338, 352.
49 (1948) 65 R.P.C. 242.
50 The plaintiff in Marengo was a well-known political cartoonist, who signed his cartoons “Kem.” The defendant published sporting cartoons by a third party, signed “Kim.” The House of Lords held that, because the signatures could be confused, the defendant's conduct amounted to a misrepresentation, and that an injunction should issue. There was no evidence, or allegation, of fraudulent intent, or that the third party had been aware of the plaintiffs cartoons, or of his use of the name “Kem.” The plaintiff did not seek any damages.
51 Including an account of profits: Spalding v. Gamage. above, n. 14, at 283, per Lord Parker. But see Lord Parmoor, at 289, saying that one who makes an appropriate misrepresentation commits “an actionable wrong, quite irrespective of motive or fraud.” In Draper v. Trist [1939] 3 All E.R. 513, 517, Sir Wilfrid Greene M.R. inclined towards a view similar to that of Lord Parmoor, but Goddard and Clauson L.JJ. expressly refused to commit themselves; ibid, at 528, 525.
52 Spalding v. Gamage, above n.14, at 283, per Lord Parker.
53 (1833) 4 B. & Ad. 410, 411, per Littledale J.
54 Above n.14. For a more recent analogue, see Wilkinson Sword Ltd. v. Cripps and Lee [1982] F.S.R. 16.
55 See, e.g. Lord Diplock, in Advocaat [1979] F.S.R. 397, 404.
56 Above n.14. at 284.
57 Whitford J. has recently put it thus: “There must … exist a possibility or possibly even a probability of confusion and deception …”: Stringfellow v. McCain Foods (GB) Lid. [1984] F.S.R. 175, 194.
58 Draper v. Trist [1939] 3 All E.R. 513.
59 ibid, at 427, per Goddard L.J.
60 ibid, at 520, per Sir Wilfrid Greene M.R.
61 Harrods Ltd. v. R. Harrod Ltd. (1923) 41 R.P.C. 74, 87, per Sargant L.J.
62 Above, n.7.
63 In Champagne, the plaintiffs were twelve producers of French champagne and exporters of it to England. There were 200 producers in all, 46 of whom exported to England: (1961) R.P.C. 116, 117. The plaintiffs had obtained authority to represent 126 producers, which included all those that exported to England: (1961) R.P.C. 116,120. In Sherry, the defendants were a small number of the “over 100 producers of sherry in and suppliers of sherry from Spain.”[1969] R.P.C. 1, 12. In Chablis, the plaintiff was one of the Chablis houses that produced wine in the Chablis district in France, but sued in a representative capacity, representing all other such producers: [1981] F.S.R. 458.
64 In Scotch Whisky, the plaintiffs were 10 companies, each a blender and exporter of Scotch whisky. There were 174 blenders in the U.K. in all, and none outside: [1970] R.P.C. 489, 496. In Advocaat, the two plaintiffs were, respectively, a manufacturer and a distributor of advocaat, accounting for 75% of the sales on the English market: [1979] F.S.R. 397, 401.
65 In Advocaat, the defendant sought to sell, as “Keeling's Old English Advocaat,” a drink made out of eggs and fortified wine. The plaintiffs drink, like that of all other Dutch producers, was made of eggs and spirits, the spirit being brandewijn, based on grain or molasses: [1979] F.S.R. 397,402. The plaintiffs were granted an injunction restraining the defendant from continuing to use the name “Advocaat.” In Sherry, the plaintiffs sold, as “British Sherry,” a wine that, unlike the defendants' wines, did not originate in Jerez, Spain; the plaintiffs were permitted to continue using the word “Sherry” as part of “British Sherry,” but were restrained from using it on its own: [1969] R.P.C. 1,2. In Chablis, the first defendant sold in Bermuda, as “Chablis” wine, wine produced in California: [1981] F.S.R. 458. 459.
66 [1979] F.S.R. 397, 408.
67 ibid.
68 This term is used by the Restatement, Torts, §761 (1939), to describe the following: One who diverts trade from a competitor by fraudulently representing that the goods which he markets have ingredients or qualities which in fact they do not have but which the goods of the competitor do have is liable to the competitor for the harm so caused, if. (a) When making the representation he intends that it should, or knows or should know that it is likely to. divert trade from the competitor, and (b) The competitor is not marketing his goods with material fraudulent misrepresentations about them. (Emphasis supplied).
It is evident from the italicised language that, ignoring questions of intent, the fact patterns contemplated by §761 and by Advocaat are precisely the same.
69 [1960] Ch. 262. 273.
70 But see the text accompanying nn.81, 82, below.
71 7 F.2d 603 (2d Cir. 1925).
72 ibid.
73 ibid., at 604.
74 ibid.
75 “[I]n the end the questions which arise are always two: Has the plaintiff in fact lost customers? And has he lost them by means which the law forbids? The false use of the plaintiffs name is only an instance in which each element is clearly shown.” ibid.
76 Mosler Safe Co. v. Ely-Norris Safe Co. 273 U.S. 132.133 (1927). Justice Holmes pointed out that it could not be assumed that the plaintiff was the sole producer of safes with explosion chambers: ibid.
77 See n.68, above.
78 ibid. The defendant's misrepresentations must be shown to have been fraudulent.
79 For example, in Advocaat.
80 Samuelson v. Producers' Distributing Co. (1931) 48 R.P.C. 447.
81 See above, n.63.
82 See the text accompanying nn.59,60, above.
83 162 F.2d 893 (2d Cir. 1947).
84 Even though Judge Hand, both in Mosler and later, as adviser to the Reporter who drafted §761 of the Restatement, was clearly thinking only of damage in the form of diverted sales. See E. Kitch and H. Perlman, Legal Regulation of the Competitive Process (2nd ed. 1979), 82–83.
85 “One falsely markets goods or services … if, in the marketing process, he makes any material false representation which is likely to induce persons to purchase, to the commercial deteriment of another, the goods or services which he markets.” Restatement, Second, Torts, §712 (Tent. Draft No.8, 1963).
86 Some of the possibilities can be seen in the recent decision in Electronics Corp. v. Honeywell Inc., 428 F.2d 191 (1st Cir. 1970), in which the plaintiff and the defendant were both manufacturers of safety control systems. Each system incorporated a programmer, which tended to wear out periodically and to need replacement. The defendant manufactured a programmer designed to fit into the plaintiffs much more successful system, and in its sales brochure, allegedly exaggerated the ease with which the installation could be made. The court expressly noted the difference in character between the misrepresentation involved here and that contemplated in Mosler and in §761, but nevertheless held the defendant liable, saying that it preferred to “take a broader view.”
87 W. R. Cornish, “Unfair Competition? A Progress Report” (1972) J.S.P.T.L. 126, 140.
88 See the text accompanying n.10, above.
89 Emphasis supplied.
90 See, especially, [1979] F.S.R. 397 at 405.
91 See, e.g., Kerly. §16–03, 320–321. This apart, however, Lord Diplock's formulation has rapidly acquired the status of a definitive account of the tort of passing-off. One fortunate result of this has been to bring about the demise, in cases in which the plaintiff and the defendant sell different goods or services, of the so-called “common field of activity” test owed to Wynn-Parry J. in McCuiloch v. May (1948) 65 R.P.C. 58: See Lego System A/S v. Lego M. Lemelstrich Ltd. [1983] F.S.R. 155, and even more markedly, Stringfellow v. McCain Foods (GB) Ltd., above n.57. This demise is celebrated, at some length, in Phillips, J. and Coleman, A.. “Passing off and the ‘Common field of activity,’” (1985) 101 L.Q.R. 242.Google Scholar
92 [1979] F.S.R. 397. 404, per Lord Diplock.
93 ibid.
94 ibid.
95 [1979] F.S.R. 397, 401, quoting Goulding J. at first instance.
96 C.I.R. v. Muller & Co.'s Margarine Ltd. [1901] A.C. 217, 223, per Lord Maenaghten.
97 [1979] F.S.R. 397, 406.
98 ibid.
99 This was found to be so in Grand Rapids Furniture Co. v. Grand Rapids Furniture Co., 127 F.2d 245 (7th Cir. 1942), in which the defendant falsely advertised that the (inferior) furniture it sold was manufactured in Grand Rapids, Michigan. The plaintiffs were several of the furniture manufacturers in Grand Rapids, and the Furniture Manufacturers Association of Grand Rapids to which all the other Grand Rapids manufacturers belonged. It was held that the complaint stated a cause of action, and a preliminary injunction was issued. By contrast, in California Apparel Creators v. Weider of California, n.83, above, the plaintiffs' action for an injunction, an accounting and damages were denied, in part because they were found to comprise (and represent) fewer than 2% of all California wearing apparel manufacturers.
1 [1979] F.S.R. 397. 407. per Lord Diplock. and 417. per Lord Fraser.
2 See text accompanying nn.85. 86. above.
3 Cornish, 474, 497–498.
4 [1954] 1 AI1E.R. 662.
5 Cornish, 496, n.34.
6 [1954] 1 All E.R. 662, 663.
7 Cornish [1972] J.S.P.T.L. 126, 139–140.
8 ibid.
9 [1979] F.S.R. 397, 411, per Lord Diplock. 417, per Lord Fraser.
10 Recognition of this fact is implicit in Harman J.'s statement that the “… defendant, who has acquired a considerable reputation in the ring in this country, probably owes his advance more to his skill than to the title to which he has wrongly laid claim”: [ 1954] 1 All E.R. 662. 663.
11 On the other hand, it is quite likely that the outcome of Cambridge University Press v. University Tutorial Press (1928) 45 R.P.C. 335 would today be different, by virtue of the Champagne principle. The plaintiff in this case was the publisher of a collection of Hazlitt's essays, which had been prescribed for an examination. It sued the defendant for having falsely represented that the defendant's collection was in fact the prescribed book, but failed. Under the Champagne principle, the plaintiff would be able to succeed, for its book (and not the defendant's) would be entitled to the goodwill associated with having been prescribed for that examination.
12 [1901] A.C. 217.
13 ibid., at 223–224.
14 [1979] F.S.R. 397. 404. per Lord Diplock.
15 Above, Part I. 1,2.
16 The plaintiff in Native Guano was the sole producer of fertiliser by the ABC process, which had formerly been patented. In American Washboard, the plaintiff had an effective monopoly of washboards with rubbing faces of aluminium, because it had acquired all the suitable aluminium available in the United States.
17 (1861) 2 J. & H. 139.
18 (1865) 12 L.T. 75.
19 Page-Wood V.-C. followed this decision of his four years later, in Southorn v. Reynolds, in which the goodwill built up by a manufacturer of clay tobacco pipes at Broseley in Shropshire (sold under the name “Southorn's Broseley pipes”) came to be vested in his two sons, who continued his business independently of each other. One of the sons was held entitled to restrain the defendant, a manufacturer of pipes in London who had procured a workman called Southorn (unrelated to the plaintiff or his brother) from Broseley, selling his pipes under the label “Reynolds' purified clay pipes made by Southorn, from Broseley,” even though the other brother had not joined in the action.
20 (1960) Ch. 262, at 277, 288, 291. Danckwerts J. also derived some support (at 281–282) from the decision in Pillsbury-Washburn Flour Mills Co. Ltd. v. Eagle, 86 Fed. 608 (7th Cir. 1898), in which seven manufacturers of a high and uniform grade of flour in Minneapolis, Minnesota, which they sold under one or more of the labels “Minneapolis,” “Minneapolis, Minn.,” “Minneapolis, Minnesota,” or “Minnesota Patent,” were held entitled to enjoin the defendants, dealers in flour in Chicago, selling allegedly inferior flour, manufactured in Milwaukee, Wisconsin, under the name “H. R. Eagle & Co's Best Minnesota Patent, Minneapolis, Minn.” The view has been expressed that this was an ordinary passing-off case, for the labels had come to signify the plaintiffs only, even to the exclusion of any other manufacturers in Minneapolis: see American Washboard Co. v. Saginaw Mfg. Co., 103 Fed. 281, 286 (6th Cir. 1900), and Buckley L. J. in Advocaat, in the Court of Appeal: [1978] F.S.R. 473,488. Some support for this view can be found in the Pillsbury opinion: 86 Fed. 608, 613; but support can also be found for the view that the plaintiffs had acquired no exclusive right to the labels, and that anybody could start milling flour in Minneapolis and make legitimate use of them: 86 Fed. 608, 614.
21 See no.27, below.
22 It was never suggested that, before the division of the businesses through succession, they had been monopolies, or nearly so.
23 Recognised by Kerly, §16–31, n.40. For another example see Shell-Mex and Aladdin Industries Lid. v. Holmes (1937) 54 R.P.C. 287.
24 See text accompanying nn.54–56, above.
25 [1979] F.S.R. 397, 404.
26 Kellogg Co. v. National Biscuit Co., 305 U.S. 111 (1938). The plaintiff in this case argued that the product shredded wheat had acquired its popularity through the plaintiff's efforts, which included the expenditure of over $17 m. on advertising, and that the defendant should not be permitted to appropriate this goodwill (through the use of the name “Shredded Wheat” and the pillow-shaped form) and associate it with its (identical) product. In a famous passage. Justice Brandeis rejected this argument: “Kellogg Company is undoubtedly sharing in the goodwill of the article known as ‘shredded Wheat’; and thus is sharing in a market which was created by the skill and judgment of plaintiffs predecessor and has been widely extended by vast expenditures in advertising persistently made. But that is not unfair. Sharing in the goodwill of an article unprotected by patent or trade-mark is the exercise of a right possessed by all-and in the free exercise of which the consuming public is deeply interested.” (305 U.S. at 122.)
27 [1979] F.S.R. 397, 410, per Lord Diplock. Product-goodwill is thus protected against damage (through, for example, debasement as a result of association with a sham product), but not against appropriation. This means that an interest in product-goodwill is non-exclusive in a much more fundamental way than the interests in Dent v. Turpin and Southorn v. Reynolds, above, nn.6. 7. Each of the brothers in those cases had a non-exclusive interest, but collectively their interest was an exclusive one, and if they had joined in the action as co-plaintiffs, the cases would have involved ordinary passing-off. In the drinks cases, however, the interests are non-exclusive, even when considered collectively, and cannot be made otherwise except by extending the scope of the protection greatly. See Shredded Wheat, n.26. above.
28 See, e.g., the Champagne case, [1960] Ch. 262, 284, per Danckwerts J. Thus, the term “Champagne” was treated as having become distinctive of a naturally sparkling wine, made by the champenois method, in the Champagne district of France, out of grapes grown there; the word “Sherry” as indicating, when standing alone, wine produced by the Solera method in the province of Jerez de la Frontera in Spain; and the words “Scotch Whisky” as referring to blended whisky the ingredients of which consisted exclusively of whiskies distilled in Scotland, wherever the blending process had taken place. [1979] F.S.R. 397, 407–408.
29 It applied, therefore, on the facts of Advocaat itself, because the name “advocaat” had come to indicate merely an eggs and spirit drink made in broad conformity with a fomula specified by the applicable Dutch legislation, whether or not it was actually manufactured in the Netherlands: [1979] F.S.R. 397, 410.
30 [1979] F.S.R. 397, 401, per Lord Diplock.
31 But see Lord Fraser, ibid, at 417, expressing “in passing” the view that the predominant policy justification was “to protect the [plaintiffs'] property in the goodwill.”
32 ibid, at 405–406.
33 Those defined by the torts of classical passing-off and injurious falsehood. Competitors have not even been allowed a private right of action arising out of the criminal legislation enacted by Parliament. In Champagne, Danckwerts J. so held with respect to the Merchandise Marks Acts, 1887–1953: [1960] Ch. 262 at 284 et seq. In Advocaat, Lord Diplock expressed the same view concerning these Acts and “even more rigorous later statutes” (such as, presumably, the Trade Descriptions Act 1968), on the ground that the protected class consists of consumers, not competitors: [1979] F.S.R. 397, 405.
34 [1979] F.S.R. 397, 405–406.
35 Jordan, Ellen R. and Rubin, Paul H., “An Economic Analysis of the Law of False Advertising,” 8 Journal of Legal Studies 427 (1979) (hereinafter, “Jordan and Rubin”).Google Scholar
36 In particular, the work of Phillip Nelson, contained in “Information and Consumer Behavior,” 78 Journal of Political Economy 311 (1970); “Advertising as Information,” 82 Journal of Political Economy 729 (1974); “The Economic Consequences of Advertising,” 48 Journal of Business 213 (1975); and “The Economic Value of Advertising,” in Advertising and Society, 43–66, (Y. Brozen, ed. 1976).
37 The account which follows is an extremely abbreviated one. For a fuller account of the analysis, and an examination of its implications for unfair competition and trademark law, see Suman, Naresh, “Trademark Rights and Incontestability,” University of Chicago Law Review, (1986) (forthcoming).Google Scholar
38 The approach that views each product in this way is derived from Lancaster, K. J., “A New Approach to Demand Theory,“ 74 Journal of Political Economy 132 (1966).Google Scholar
39 This category is recognised in Darby, Michael R. and Edi, Karni, Free Competition and the Optimal Amount of Fraud,“ 16 Joumal of Law and Economics 67, 68–72 (1973). See Jordan and Rubin, at 530–531.Google Scholar
40 Jordan and Rubin, 528–532.
41 ibid.
42 Such a statement probably does not give rise, under existing law, to liability in injurious falsehood: although this tort imposes no formal restriction upon the content of the false statement, the damage requirement in effect confines liability to those cases in which the statement has been made about the plaintiffs goods, trade, etc. See Cornish, 502.
43 In Champagne, Danckwerts J. rejected the argument that this last was what the word had come to mean in England: [1961] R.P.C. 116, 123. This rejection was based, not on any direct evidence of consumer perceptions, but on testimony from wine experts, and from those in the wine trade; a survey might have revealed more clearly the complexity of the meaning associated with the word. For a celebrated, though less complex, example of the ambiguity of a name, see Havana v. Oddenino [1923] 2 Ch. 243; [1924] 1 Ch. 179, in which the word “Corona” was treated as distinctive of the plaintiffs' cigars to some buyers, but as descriptive of the size and shape of a certain type of cigar to others.
44 Champagne [1961] R.P.C. 116, 127; Cornish, 496.
45 The conveyance of false information to the first, knowledgeable, group was probably unlikely even without the court's decision, since the geographical adjective “Spanish,” used by the defendant, would have been sufficient warning to them. Preventing all use of the word “Champagne” was, therefore, necessary only in the interest of the (quasi-knowledgeable) members of the second group.
46 In Advocaat, the defendants, by using fortified wine instead of spirits, were able to sell their product at 50p a bottle cheaper than the plaintiffs', because of the lower excise duty payable: [1979] F.S.R. 397, 401.
47 In Native Guano, for instance, buyers who were satisfied with the performance characteristics of the defendant's fertiliser would probably not have cared that it was not made by the ABC process.
* I am grateful to Gareth Jones and Tony Weir for their most helpful comments on earlier versions of this article.