CHOCOSUISSE UNION V. CADBURY LTD
[1999] R.P.C.
IN THE COURT OF APPEAL
5
Before:
THE LORD CHIEF JUSTICE (LORD BINGHAM)
LORD JUSTICE BROOKE
LORD JUSTICE CHADWICK
Judgment delivered February 25,1999
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Passing off—Reputation in a geographical name—Whether name distinctive of a
specific group of products—Whether distinctiveness subsequently lost—Whether
trade association entitled to sue in a representative capacity—Whether trade
association had cause of action
Rules of the Supreme Court, Ord. 15 r.12
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The first plaintiff was the association for the Swiss chocolate industry. The
second and third plaintiffs were well known manufacturers of chocolate
confectionery and were members of the association. The second and third
plaintiffs sold in the United Kingdom chocolate made in Switzerland and also
from 1994 chocolate made elsewhere. However on the packaging of the latter they
did not use the words "Swiss chocolate". The defendant was the leading
manufacturer of chocolate confectionery in the United Kingdom. In October
1994 it launched a new product called "Swiss Chalet". This product was made in
England and the plaintiffs brought a passing off action alleging that the defendant
had passed off "Swiss Chalet" as "Swiss chocolate".
At first instance (reported at [1998] R.P.C. 117), the judge found that the term
"Swiss chocolate" denoted a group of products, namely chocolate made in
Switzerland in accordance with Swiss food regulations, that a substantial number
of persons would be deceived by the use of the term "Swiss Chalet" into thinking
that the chocolate was Swiss chocolate and that passing off had been established.
The defendant appealed. It contended that the Swiss chocolate manufacturers had
no goodwill in the designation "Swiss chocolate" which was capable of being
protected by law and that the sales of its "Swiss Chalet" product did not constitute
a representation that it was Swiss chocolate. The judge also found that the first
plaintiff was not entitled to sue in a representative capacity. The first plaintiff
cross-appealed on its capacity to sue and further in its respondent's notice sought
to restrict the definition of the product (by adding a requirement that the product
contained no added vegetable fat) for which protection was sought. Although the
defendant had accepted before the judge that the first plaintiff could bring
proceedings for passing off to prevent the reduction in its membership if the
designation "Swiss chocolate" became unprotectable in England, it now
challenged this on the ground that the first plaintiff had neither alleged nor
adduced evidence that it had any reputation in England, that it had actual or
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CHOCOSUISSE UNION DES FABRICANTS SUISSES DE CHOCOLAT
V. CADBURY LTD
[NO. 23]
COURT OF APPEAL
potential members in the jurisdiction and that it had suffered or was likely to
suffer damage.
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Held, dismissing the appeal and the cross-appeal:
(1) If the words "Swiss chocolate" were no more than descriptive, whether of
the place of manufacture or the identity of the manufacturer, they could not found
an action for passing off. (pages 832, 848, 849)
(2) There was no evidence that in October 1994 when the defendant launched
its product that any of the chocolate products manufactured outside Switzerland
by the second and third plaintiffs and other Swiss manufacturers were regarded
by any substantial section of the public as "Swiss chocolate", (pages 836,846-848,
849)
(3) As at October 1994, the words "Swiss chocolate " were taken by a significant
section of the public to denote a group of products of distinctive reputation.
Consequently, the words could be protected by means of a passing off action.
(pages 836, 848, 849)
(4) The question whether or not there had been or whether there was likely to be
confusion was a question of fact for the judge who had heard the witnesses and
who had a much better opportunity of evaluating the flavour of the evidence. The
judge had not misdirected himself and the appellate court would not interfere.
(pages 838-839, 849)
(5) The respondent was entitled to define the product for which it sought
protection in narrower terms than those adopted by the judge, (pages 839-840,
849)
(6) Whilst there had been sales of chocolate made other than in Switzerland by
the second and third plaintiffs and other members of the first plaintiff from 1994,
the judge did not form the view that the market had become so confused by
October 1997 (the date of the trial) that there was no goodwill to protect. The
grant of the injunction was as an exercise of his discretion and it was not
appropriate for the appellate court to interfere, (pages 841, 849)
(7) In order to sue in a representative capacity, RSC Ord. 15, r.12 required the
representative plaintiff to have the same interest in the proceedings as the person
purported to be represented. This was not the case here, (pages 842-843, 849)
Consorzio del Prosciutto di Parma v. Marks and Spencer pic [1991] R.P.C.
351 followed.
(8) The first plaintiff had no locus to sue in its own right. There was no business
interest or goodwill which it was entitled to protect in an action in England for
passing off against a trader, (page 843, 849)
The Scotch Whisky Association v. J D Vintners Ltd [1997] Eur. L.R. 446
approved.
The following cases were referred to in the judgments:
Barnsley Brewery Co. Ltd v. RBNB [1997] F.S.R. 462.
Bollinger and Others v. Costa Brava Wine Company Ltd [1960] R.P.C. 16.
Cadbury-Schweppes Pty Ltd v. The Pub Squash Co. Pty Ltd [1981] R.P.C.
429.
Consorzio del Prosciutto di Parma v. Marks and Spencer pic [1991] R.P.C.
351.
Ladd v. Marshall [1954] 1 W.L.R. 1489.
Penney (JC) Inc. v. Penneys Ltd [1975] F.S.R. 367.
Scotch Whisky Association (The) v. J D Vintners Ltd [1997] Eur. L.R. 446.
CHOCOSUISSE UNION V. CADBURY LTD
[1999] R.P.C.
Slazenger & Sons v. Spalding & Brothers [1910] 1 Ch. 257.
Taittinger SA v. Allbev Ltd [1993] F.S.R. 641.
Warnink (Erven) BV v. J Townend & Sons (Hull) Ltd [1980] R.P.C. 31.
5
Michael Bloch, Q. C. instructed by Willoughby & Partners appeared on behalf of
the appellant/defendant. Simon Thorley, Q. C. and Colin Birss instructed by Bird
& Bird appeared on behalf of the respondents/plaintiffs.
THE LORD CHIEF JUSTICE:
•*•"
I will ask Chadwick L.J. to give the first judgment.
CHADWICK L.J.:
Introduction
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The appellant, Cadbury, is the leading manufacturer of chocolate confectionery
in the United Kingdom. The first named respondent; Chocosuisse, is a trade
association for Swiss based chocolate manufacturers. The second and third named
respondents, Kraft Jacobs Suchard (Schweiz) AG ("Suchard") and Chocoladefabriken Lindt & Sprungli (Schweiz) AC ("Lindt") are members of that
association. Suchard and Lindt, and their respective chocolate-making predecessors, have been involved in the manufacture of chocolate in Switzerland for a
very long time. The judge found, and it is not in dispute, that Swiss based
manufacturers of chocolate, including Suchard and Lindt, had played a major role
over the years in the development of the art and technology of chocolate making.
The dispute between the parties arises out of the introduction by Cadbury in
October 1994 of a new chocolate bar under the name "Swiss Chalet". The
packaging in which the "Swiss Chalet" bar was marketed is illustrated at Annex 1
to the report of Mr Justice Laddie's judgment at [1998] R.P.C. 117, at page 150.
The words "Swiss Chalet" appear on the package sleeve in large gold-rimmed red
letters, with a picture of a snow-capped mountain—plainly intended to be
identified as the Matterhorn—and an alpine chalet in the valley below. The
package sleeve bears the word "Cadbury" in the familiar script format; and the
familiar Cadbury "glass and a half" logo to indicate milk chocolate.
The circumstances in which the "Swiss Chalet" bar was introduced are
explained by Miss Cater, who was the product manager at Cadbury at the relevant
time. In a witness statement made on March 31,1997, which stood as her evidence
in chief, she explained that, in 1993, Cadbury decided to introduce further variety
into the 100 gram moulded bar range—which then included the three best loved
Cadbury brands, Fruid and Nut, Whole Nut and Dairy Milk, as well as other
varieties known as Turkish, Golden Crisp, Tiffin and Top Deck—as there was
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The principal appeal before us is from an order made on October 29,1997 by
Laddie J. in a passing off action brought by Chocosuisse Union des Fabricants
Suisse de Chocolat ("Chocosuisse"), and others, purporting to sue on behalf of
themselves and all other persons who manufacture chocolate in Switzerland and
export such chocolate to the United Kingdom, against Cadbury Ltd ("Cadbury").
By that order the judge ordered that Cadbury be restrained from passing off
2Q chocolate, not being Swiss chocolate, by the name "Swiss Chalet" or any other
name colourably similar thereto; and an enquiry as to damages suffered by reason
of Cadbury's acts of passing off.
ic
[NO. 23]
COURT OF APPEAL
CHADWICK L.J.
thought to be further growth potential in that range. A "Swiss Chalet"
variety—milk chocolate flavoured with almond and honey—was known to be
selling well in Australia. There was no equivalent Cadbury product on the United
Kingdom market; but Toblerone, a Suchard product, which includes milk
chocolate and honey flavoured nougat, was popular here. At paragraph 4 of her
witness statement Miss Cater said this:
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The new product was not particularly successful; at least by the standards of
other products in the 100 gram range. Sales of Swiss Chalet bars exceeded £1
million in 1995; but fell back to approximately £500,000 in 1996. It was withdrawn
in July 1997, following concern over the use of peanut oil in the recipe. But, in the
first six months of 1997, sales had dropped to some £167,000.
The injunction granted in these proceedings in October 1997 intervened before
the product could be re-launched. Swiss Chalet bars have, therefore, been off the
market for the past 18 months.
These proceedings
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These proceedings were commenced by writ issued on 27 November 1995. A
statement of claim was served on January 4,1996; and was amended and re-served
on February 10,1997. Paragraphs 5,6 and 7 of the amended statement of claim are
in these terms:
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"5.
6.
7.
Great advances in methods of chocolate manufacture were originally
made by the Swiss Chocolate Manufacturers and Swiss chocolate is
perceived by the public in the United Kingdom and throughout the
world to be of very high quality. Switzerland was one of the first
countries in the world to export chocolate commercially.
For the purposes of this action the plaintiffs will rely upon the following
factors as identifying Swiss chocolate:
(a) it is made in Switzerland;
(b) it has at least 25 per cent cocoa solid content for milk and plain
chocolate, as is required by Swiss and E.C. law (article 333 of the
Swiss Food Law Ordinance) (Ordonnance sur les denrees alimentaires, ODAI du 1 Mars 1995) and paragraph 1.21 of annex II of
E.C. Diretive 73/241/EEC);
(c) it contains no vegetable fat other than cocoa fat; and
(d) it has a smooth texture due to the fact that there is a high percentage
of fat and a small chocolate particular size.
By reason of the aforesaid the Swiss Chocolate Manufacturers including
the Second and Third Plaintiffs have acquired a substantial goodwill and
reputation in the United Kingdom in relation to Swiss chocolate as
aforesaid."
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"Therefore when the Technical Development department were consulted to
create an appropriate recipe for Swiss Chalet, they looked at both the
Australian recipe for Swiss Chalet and at Toblerone to create an appropriate
taste for the U.K. market. Swiss Chalet was not however designed as a direct
competitor to Toblerone as it is a much cheaper product and received no
advertising support... However, Swiss Chalet was designed as part of the 100
gram range."
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CHOCOSUISSE UNION V. CADBURY LTD
[1999] R.P.C.
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In that context "the Swiss Chocolate Manufacturers" means persons who
manufacture chocolate in Switzerland and export such chocolate to the United
Kingdom—see paragraph 4. Paragraph 9 contains the allegation that, by selling
chocolate under the name Swiss Chalet, Cadbury is representing, contrary to fact,
5 that that product is Swiss chocolate (as defined in paragraph 6) and that a
substantial number of the interested public in the United Kingdom are likely to be
confused. Paragraph 10 asserts passing-off.
The claim in the present case is not a claim for passing-off in the classic
form—that is to say, a claim against a defendant trader who represents his own
10 goods as the goods of the individual complainant. Rather it is a claim in the
extended form of passing-off, first recognised and applied in this jurisdiction by
Danckwerts J in Bollinger and others v. Costa Brava Wine Company Ltd [1960]
R.P.C. 16 ("the "Spanish Champagne case"), and subsequently endorsed by the
House of Lords in Erven Warnink BV v. J Townend & Sons (Hull) Ltd [1980]
R.P.C. 31 ("the Advocaat case"). In the latter case Lord Diplock pointed out, at
page 94 line 42 to page 95 line 5, that the features which distinguished the Spanish
Champagne case from all previous cases were (a) that the element in the goodwill
of each of the individual plaintiffs that was represented by his ability to use
without deception (in addition to his individual house mark) the word "Champagne" to distinguish his wines from sparkling wines not made by the champenoise process from grapes produced in the Champagne district of France, was not
exclusive to himself but was shared with every other shipper of sparkling wine to
England whose wines could satisfy the same condition and (b) that the class of
2r traders entitled to a proprietary right in "the attractive force that brings in
custom" represented by the ability without deception to call one's wines
"Champagne" was capable of continuing expansion, since it might be joined by
any other shipper who was able to satisfy that description. It is the presence of
comparable features which marks the extended form of passing-off. They are said
3Q to be present in this case, in respect of the designation "Swiss chocolate".
In the Advocaat case Lord Diplock identified, at page 93 lines 28-33, five
characteristics which must be present in order to create a valid cause of action in
passing-off. They were: (1) a misrepresentation, (2) made by a trader in the course
of trade, (3) to prospective customers of his or ultimate consumers of goods and
35 services supplied by him, (4) which is calculated to injure the business or goodwill
of another trader (in the sense that this is a reasonably foreseeable consequence)
and (5) which causes actual damage to the business or goodwill of the trader by
whom the action is brought or (in a quia timet action) will probably do so. The
need for those five characteristics in an action based on the extended form of
40 passing-off (as in the classic form) was recognised by this court in Taittinger SA
and others v. Allbev Ltd and another [1993] F.S.R. 641—see per Peter Gibson LJ.
at page 664. There is no serious dispute as to the existence of elements (2) and (3)
in the present case. Nor is it seriously disputed that if elements (1) and (4) are
present, there is sufficient prima facie evidence to justify an enquiry as to damage.
45 The dispute is as to elements (1) and (4). Cadbury contends, in effect, that the
Swiss Chocolate Manufacturers have no goodwill in the designation "Swiss
chocolate" which is capable of being protected by the law; and, further, that sales
of its product Swiss Chalet do not constitute a representation that that product is
Swiss chocolate.
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The judge recorded that it was common ground that the relevant legal principles
[NO. 23]
COURT OF APPEAL
CHADW1CK L.J.
applicable to those issues are to be found in the speeches in the House of Lords in
the Advocaat case. He referred to a passage in the speech of Lord Fraser, at page
105 line 41 to page 106 line 5, on which, as he said, the plaintiffs placed particular
reliance:
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It was accepted before the judge that Suchard and Lindt, and the other Swiss
Chocolate Manufacturers who they represent in these proceedings, were selling ^5
chocolate in England which satisfied the description "Swiss chocolate" set out in
paragraph 6 of the amended statement of claim—that is to say, chocolate made in
Switzerland in accordance with Swiss food regulations and having no added
vegetable fat. To that extent they met the first of Lord Fraser's five criteria. It was
not accepted that Chocosuisse itself was selling chocolate at all—indeed, the
plaintiffs did not suggest that it was—and, accordingly, Cadbury contended that
Chocosuisse did not meet that first requirement. It was denied that any of the
plaintiffs met the other four of Lord Fraser's criteria. It was further contended that
all three plaintiffs were debarred, by reason of unclean hands, from obtaining any ,,,relief in the action, even if passing-off were proved.
The ability of Suchard and Lindt to sue in a representative capacity was not in
dispute. But there was a formal challenge to Chocosuisse's right to sue in that
capacity. The judge held that Chocosuisse were not entitled to sue in a
representative capacity. That is the subject of a cross appeal and I shall return to ^Q
that issue later in this judgment.
It will be necessary also, in a later part of this judgment, to consider whether the
description set out in paragraph 6 of the amended statement of claim is the
appropriate description by which to identify the class of goods which, as is
admitted, the Swiss Chocolate Manufacturers sell in the United Kingdom. But, as 45
a working definition for the purposes of this part of the judgment, the class can be
described as "chocolate made in Switzerland". The first main issue between the
parties is whether, in the minds of the public or a section of the public in this
country, the designation "Swiss chocolate" distinguishes that class of goods from
other similar goods.
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"It is essential for the plaintiffs in a passing off action to show at least the
following facts:
(1) that his business consists of, or includes, selling in England a class of
goods to which the particular trade name applies;
(2) that the class of goods is clearly denned, and that in the minds of the
public, or a section of the public, in England, the trade name
distinguishes that class from other similar goods;
(3) that because of the reputation of the goods, there is a goodwill
attached to the name;
(4) that he, the plaintiff, as a member of the class of those who sell the
goods, is the owner of goodwill in England which is of substantial
value;
(5) that he has suffered, or is really likely to suffer, substantial damage
to his property in the goodwill by reason of the defendants selling
goods which are falsely described by the trade name to which the
goodwill is attached."
CHOCOSUISSE UNION V. CADBURY LTD
[1999] R.P.C.
Does "Swiss chocolate" have a distinctive meaning and reputation?
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"It is only if they [the words 'Swiss chocolate'] are taken by a significant part
of the public to be used in relation to and indicating a particular group of
products having a discrete reputation as a group that a case of passing off can
get off the ground. I have had to bear this in mind when assessing the evidence
of what the words mean to members of the public. If they convey nothing
more than their descriptive meaning the action must fail."
There were, therefore, two questions to be addressed on this part of the case: (i)
would the words "Swiss chocolate" have been taken by a significant section of the
public in England at the relevant time to mean, and to mean only, chocolate made
in Switzerland; and if so, (ii) did chocolate made in Switzerland have a discrete
reputation, distinct from other chocolate, which the Swiss Chocolate Manufacturers were entitled to protect?
The judge addressed those questions in a section of his judgment headed "Is
there a class of goods with protectable goodwill? " He reviewed the evidence on the
second question—reputation—in two categories; first, that of members of the
public. At page 130 line 38 and following, he observed that there were many who
thought that "Swiss chocolate" meant more than simply chocolate from a
geographical origin. The designation appeared to have a reputation for quality,
expense and exclusivity. He summarised that evidence in the following passage,
[1998] R.P.C. 117, at page 131 line 48 to 132 line 6:
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The issue arises in the circumstances that both Suchard and Lindt (or locally
based subsidiaries of the Swiss parent) sell in England and Wales chocolate which
c is not made in Switzerland. In particular, Lindt sell plain and milk chocolate bars
in their "Excellence" range which are manufactured in France; and Suchard sell
"Milka" bars which are manufactured in Germany. Further, until 1992 (when
production was moved to Switzerland), Suchard sold "Toblerone" bars which
were manufactured in England. It is convenient to refer to those products as
IQ "Swiss branded chocolate"—because that description has been used in argument
before us—but a more accurate description would be "chocolate made by Swiss
manufacturers outside Switzerland". It is not material, in this context, whether the
actual manufacturer is the Swiss parent company or a local eponymous subsidiary.
It is common ground that there is no material difference in quality between the
I c Swiss branded chocolate and the equivalent product made by Suchard or Lindt (as
the case may be) in Switzerland. They are, however, packaged differently. In
particular, neither Suchard nor Lindt uses the words "Swiss chocolate" on the
packaging of the products which they manufacture outside Switzerland. But those
words, or some near equivalent, do appear on the packaging of chocolate made by
2Q Suchard and Lindt in Switzerland.
The words "Swiss chocolate" are, as the judge pointed out, [1998] R.P.C. 117, at
page 129 line 31, descriptive in nature. They are clearly apt to describe chocolate
made in Switzerland. But they are also apt to describe chocolate made to a Swiss
recipe with Swiss expertise by a Swiss manufacturer. If the words are no more than
2c descriptive—whether of the place of manufacture or of the identity of the
manufacturer—they cannot found an action in passing-off. The judge identified
the point, correctly in my view, in the following passage of his judgment, [1998]
R.P.C. 117, at page 129 lines 31 to 36:
[NO. 23]
COURT OF APPEAL
CHADWICK L.J.
"A considerable number of members of the public seemed to think that Swiss
chocolate was different to and more up-m".rket than other types of chocolate
but the precise reason for feeling that and the respects in which Swiss
chocolate was thought to differ from other chocolates varied from witness to
witness. On this issue, as on all others where evidence from members of the
public is concerned, both parties agreed that it was impossible from the
comparatively small number of witnesses called to come to any quantitative
conclusion on what the public's view is. They give the court a flavour of the
diversity of opinions held and some feel for why certain opinions are held."
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"She is involved in selecting and developing chocolate products for sale in
Marks & Spencer's retail outlets throughout the United Kingdom. She has
worked at Marks & Spencer since April 1994 and has been employed as a
product selector since that time. One of the lines she has been involved in
developing and of which she is currently in charge is Marks & Spencer's line
of Swiss chocolate products. Her evidence was that Marks & Spencer's Swiss
chocolate has been very successful and is one of that company's core
products. Her employer sells in excess of 100,000 items of Swiss chocolate per
week. Marks & Spencer have stocked a Swiss chocolate mountain bar for 10
years, an extra fine Swiss chocolate bar for three years and a big Swiss
chocolate tablets bar for five years ... This chocolate is made in Switzerland.
In this respect Marks & Spencer is in competition with other major retailers.
For example Waitrose Pic also sell a bar of chocolate under the name 'Swiss
White Chocolate' and Boots also sells 'Swiss Milk Chocolate' ... These
products also are made in Switzerland.
Ms Kirkbride said that Swiss chocolate was sold because it provided a
'point of difference' over standard milk chocolates. She also said that the
Marks & Spencer Swiss chocolate was perceived by Marks & Spencer to have
a reputation among the public as a premium product and the fact of its Swiss
origin was 'a unique selling point'. She said:
'Each of our Swiss chocolate wrappers bears the description "Swiss
chocolate". We make sure the word "Swiss" is emphasised on the label.
This is very important in establishing the point of difference of the products
and capitalising on the reputation of Swiss chocolate. Not only do we refer
to it as St Michael's Swiss Milk chocolate, we also have a separate brand
used on all our Swiss chocolates which shows the word "Swiss" on a
mountain background in an oval logo'."
As the judge pointed out, Ms Kirkbride was cross-examined at the trial; but
none of the evidence set out above was challenged.
The judge summarised the evidence as to reputation in the following passage,
[1998] R.P.C. 117, at page 133 line 29 to 39:
"Bearing in mind all the evidence, I have come to the conclusion that the
words 'Swiss chocolate' have acquired in England a distinct reputation.
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The judge then considered the evidence of trade witnesses on that question—
including, in particular, the evidence of Ms Kirkbride, the product selector for
Marks & Spencer pic. In an important passage, he summarised her evidence as
follows, [1998] R.P.C. 117, at page 132 line 11:
CHOCOSUISSE UNION V. CADBURY LTD
[1999] R.P.C.
15
The judge then turned to what I have described as the first question under this
head: would the words "Swiss chocolate" have been taken by a significant section
of the public in England at the relevant time to mean (and to mean only) chocolate
made in Switzerland? He said this, [1998] R.P.C. 117, at page 133 lines 41 to 49:
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"However, even if the words have acquired a reputation, it is necessary to
identify what groups of products are entitled to use it. Both parties accepted
that, in accordance with the speech of Lord Diplock in Advocaat, the
plaintiffs needed to identify the class or group with reasonable precision. On
this issue the parties were far apart. Cadbury suggested that the words 'Swiss
chocolate' could now be used on such a diffuse class of products from
different places in the world, to different recipes and having different tastes
that there really was no class at all. On other hand the plaintiffs, understandably, were anxious to argue that the class was as narrow as possible,
thereby excluding more of their competitors."
He summarised Cadbury's contention—that there was no distinctive class of
goods identified in the minds of a significant portion of the public by the
designation "Swiss chocolate"—in a passage at page 135 lines 41 to 50:
"As I have mentioned, Cadbury argued that there is no class of goods which
can be identified with reasonable precision. It points to the fact that some
members of the public who believe that Swiss chocolate is a product with a
connotation of quality, do not think that it comes from Switzerland. I have
quoted above some witnesses who appear to have that view. Further it says
that quite a few people thought that chocolate which did not come from
Switzerland did in fact come from there. For example some Lindt chocolate is
made in France. It is not marked with the words Swiss chocolate. Nevertheless quite a few members of the public seem to have assumed it was Swiss
chocolate."
The judge rejected those contentions. He directed himself, correctly, that "what
is required to identify the class of goods which has built up and is entitled to exploit
the goodwill"—see page 136 line 9. He had already held, [1998] R.P.C. 117, at page
135 lines 26 to 28, that:
"The term 'Swiss chocolate' is the designation which has been used, save for
very minor exceptions, only on chocolate made in Switzerland in accordance
with food regulations."
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10
Although it refers to chocolate which emanates from Switzerland, the
plaintiffs have proved that to a significant part of the public here those words
denote a group of products of distinctive reputation. Further, the actions of
major retailers like Marks & Spencer reinforce that conclusion. They are
experts in assessing and catering to the wishes of the public. I accept Ms
Kirkbride's evidence as indicating Marks & Spencer's view that the words
'Swiss chocolate' had a reputation for quality among a significant part of the
public. The fact that members of that public have different views of what the
features of the distinctive quality are or are incapable of defining it is of little
relevance."
[NO. 23]
COURT OF APPEAL
CHADWICK L.J.
He confirmed that view at page 136 lines 10 to 14:
"... the fact that some brand names, like Lindt, are so strong that members of
the public treat them as if they were a statement of Swiss origin does not alter
the fact that, save for very minor exceptions, the words 'Swiss chocolate' have
been used only on chocolate made in Switzerland, presumably in accordance
with Swiss food regulations."
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It is plain that the judge answered the question—would the words "Swiss
chocolate" have been taken by a significant section of the public in England at the
relevant time to mean (and to mean only) chocolate made in Switzerland—in the
affirmative. Thefirstmain question raised on this appeal is whether he was correct
to take that view.
Cadbury accepts, as I understand the submissions made by Mr Bloch Q.C. on its
behalf, that chocolate made in Switzerland is a class of goods to which the
designation "Swiss chocolate" is applicable. It is accepted (for the purposes of the
action) that chocolate made in Switzerland is the only class of goods in connection
with which the Swiss Chocolate Manufacturers have used the words "Swiss
chocolate" in packaging or marketing their products (with a few minor exceptions
which are not material). Nevertheless, Mr Bloch Q.C. contends that, on the
evidence, it is clear that a substantial portion of the goods to which members of the
public actually apply the designation "Swiss chocolate" is not manufactured in
Switzerland. It is said that the judge was wrong tofindon the evidence that "Swiss
chocolate" was prima facie descriptive of chocolate made in Switzerland. The
words were no less apt to describe chocolate made outside Switzerland but to
Swiss recipes, or to describe chocolate made outside Switzerland but sold under a
famous Swiss brand name—for example Suchard or Lindt. The judge ought to
have reached the conclusion that that was how a significant section of the public
did understand the designation "Swiss chocolate".
Mr Bloch's submissions on this point may, I think, fairly be summarised as
follows: (1) the Swiss Chocolate Manufacturers apply the designation "Swiss
chocolate" to chocolate made in Switzerland in accordance with Swiss regulations;
(2) the goods from which "Swiss chocolate" (in that sense) need to be
distinguished are chocolate made outside Switzerland; (3) chocolate made outside
Switzerland includes chocolate made to Swiss recipes or by famous Swiss
names—that is to say, Swiss branded chocolate; (4) a substantial portion of the
relevant public—that is to say that section of the public who purchase and/or
consume chocolate—apply the designation "Swiss chocolate" not only to
chocolate made in Switzerland but also to Swiss branded chocolate; (5) it is clear,
therefore, that in the minds of a substantial portion of the relevant public the term
"Swiss chocolate" does not serve to distinguish chocolate made in Switzerland
from Swiss branded chocolate; (6) in order for the Swiss Chocolate Manufacturers
to be entitled to a monopoly in the use of the name "Swiss chocolate" they need to
be able to show that any use of the name other than to identify chocolate made in
Switzerland is mistaken or inaccurate.
The submissions which I have enumerated as (1) to (5) are submissions as to
fact. Submissions (1) to (3) are not in dispute. Nor do I think that there is any real
doubt that submission (4) was established as at the date of the trial. As the judge
CHOCOSUISSE UNION V. CADBURY LTD
[1999] R.P.C.
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observed, at page 135 line 50, in a passage to which I have already referred:
"Nevertheless quite a few members seem to have assumed it [Lindt chocolate
made in France] was Swiss chocolate". If submission (4) is made out, submission
(5) seems to me to follow. Submission (6) is a question of law. It arises only if the
5 factual submissions are made out.
The fallacy in Mr Bloch's argument, if I may say so, lies in the failure to relate
the evidence to the point of time by reference to which it was necessary for the
judge to determine whether the words "Swiss chocolate" were taken by a
significant section of the public in England to mean (and to mean only) chocolate
10 made in Switzerland. It was common ground that the relevant time, for the
purpose of determining whether there had been passing-off, was the date on which
Cadbury put its product, "Swiss Chalet" on the market: see JC Penney Inc. v.
Penneys Ltd [1975] F.S.R. 367, at page 381, Cadbury-Schweppes Pty Ltd v. The
Pub Squash Co. Pty Ltd [1981] R.P.C. 429, at page 494, and the observations of
15
Robert Walker J. in Barnsley Brewery Company Ltd v. RBNB [1997] F.S.R. 462,
at page 470. That date was, of course, October 1994.
The judge held that there was goodwill, or "cachet", attached to the designation
"Swiss chocolate". He addressed the correct question: what class of goods had
built up that goodwill? I am satisfied that, on the evidence before him, there was
really only one answer to that question. It came from the evidence of Ms
Kirkbride, who was the only independent witness who was in a position to speak
with any authority as to the position in October 1994. It was her responsibility, as
product selector at Marks & Spencer, to know what the public expected to obtain
r
under the designation "Swiss chocolate". She seems to have had no doubt that
2
what the public expected was chocolate made in Switzerland.
Ms Kirkbride's view is consistent with the actual state of the market in late 1994.
I have had the advantage of reading in draft the judgment which Brooke L.J. is
about to deliver. I adopt, with gratitude, his historical analysis. The position may
3Q be summarised as follows: (1) there had been very little penetration of the United
Kingdom market by Lindt in relation to products manufactured outside Switzerland before the end of 1994; (2) from 1992 onwards Toblerone was manufactured exclusively in Switzerland; although it had been manufactured in England
during the 1970s and 1980s, it had not been marketed here as "Swiss chocolate";
35 (3) Milka, a Suchard product, had been manufactured in England until the late
1970s; during the 1980s it was, in practice, withdrawn from the market in England;
thereafter, in the late 1980s, production was moved to Germany and it was sold
here under a label which described the product as "made in Germany". There was
evidence of an advertisement linking Milka with Swiss holidays at the time of the
40 re-launch in 1989; but it was never labelled as a Swiss product. The most that could
be said was that, thereafter, Milka was packaged in a way which suggested an
alpine provenance. But there was no evidence that it was regarded by any
substantial section of the public in October 1994 as "Swiss chocolate" rather than
as chocolate coming from Germany—as would have been clear to anyone who
45 studied the label.
In these circumstances, I am satisfied that the judge was entitled to hold that, as
at October 1994, the words "Swiss chocolate" were taken by a significant section of
the public in England to mean (and to mean only) chocolate made in Switzerland.
It follows from that, and from his finding in relation to reputation, that Lord
50 Fraser's criteria (2), (3) and (4), in the Advocaat case, were made out at trial.
[NO. 23]
COURT OF APPEAL
CHADWICK L J .
Misrepresentation
Misrepresentation is an essential element in the tort of passing-off. But
misrepresentation, in this context, lies in marketing goods in a way which will lead
a significant section of the public to think that those goods have some attribute or
attributes which they do not truly possess. That arises where there is confusion, or
the likelihood of confusion, in the minds of the public between the goods of the
defendant and other goods which do possess that attribute or those attributes.
The judge identified the question to be answered in the present case in the first
two sentences of the section of his judgment headed "Has there been or is there
likely to be relevant confusion?" He said this, [1998] R.P.C. 117, at page 136, lines
26 to 31:
He directed himself, correctly, that the court's task was to decide how ordinary
members of the chocolate-buying public would understand the words "Swiss
Chalet" in the real world—by which he meant in the environment in which the
product was offered for sale. He identified the need for caution in seeking to
decide that question in the light of the detailed analysis that takes place in the
course of a passing-off trial. In my view, no criticism can be made of the judge's
approach to the task which he set himself.
The judge recognised that this was not a clear case, in which the likelihood of
confusion was self-evident. He indicated that he thought it unlikely that he would,
himself, have been led to think that the Cadbury product was Swiss chocolate if he
had seen it on a supermarket shelf rather than in the context of passing-off
proceedings. But he reminded himself that his own subjective view could not be
decisive. At [1998] R.P.C. 117, page 137 lines 36 to 46 he said this:
"It is clear that many people will not be confused by the use of the words
'Swiss Chalet' into believing that Cadbury's product is the Swiss chocolate of
repute. For some this is because the words 'Swiss Chalet' would not be taken
to be the same as 'Swiss chocolate' and for many, the impact of 'Swiss Chalet'
was submerged by the use of the powerful 'Cadbury' name and the
association that the latter had with Bournville in England. For people who
made that association and for whom the words 'Swiss chocolate' meant a
product of high reputation from Switzerland, the domestic significance of the
Cadbury name would prevent confusion. However, as indicated below there
was evidence that at least some members of the public appeared to think that
Swiss Chalet was Swiss chocolate."
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He then reviewed the evidence on this topic in detail. He expressed his conclusion
at page 143, line 8:
"This gives one someflavourof the spread of evidence put before the court. I
think it clear that for many people, including some of those for whom the
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"The question now to be answered is whether the use of the words 'Swiss
Chalet' by Cadbury on its product has led or is likely to lead members of the
public to believe that it is a Swiss chocolate. That is to say, have the plaintiffs
proved that those members of the public for whom the words 'Swiss
chocolate' have a reputation will be confused into believing that this product
is one of the group of products which can legitimately bear that designation."
CHOCOSUISSE UNION V. CADBURY LTD
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words Swiss chocolate meant a product of quality from Switzerland, the
prominent use of the famous Cadbury name and get up would be enough to
prevent them thinking that Swiss Chalet is a Swiss chocolate. Furthermore
there are very many for whom the origin or connections of Swiss Chalet will
be irrelevant. In addition to this, I think that in some cases it is likely that the
questions asked in both the plaintiffs' and the defendant's surveys may have
resulted in the interviewees entering into an area of speculation which would
not normally have crossed their minds. Many people, and particularly those
who are more observant, would not be confused. For them the words 'Swiss
Chalet' will signify nothing but a pretty sounding name for a bar of chocolate.
They will convey no other message. However, I have come to the conclusion
that there are some who will be struck by the largest and most prominent
word on the defendant's packaging namely 'Swiss' and think that it is a
reference to an attribute of the product itself. I think it is likely that some will
think that it is an indication that the product is Swiss chocolate. Some, like Mr
Crocker, may not see the reference to Cadbury. Others might not believe that
all Cadbury chocolate is made in England. In fact it is not all made here.
Cadbury like many other manufacturers has set up factories or formed
alliances abroad. Further, for some the get up of the packaging with its typical
Swiss scene will tend to reinforce the message of the word 'Swiss'. Finally,
some may be left in confusion as to whether Swiss Chalet is Swiss chocolate or
not.
I have found this the most difficult issue in the case. However, I have come
to the conclusion that a substantial number of members of the public who
regard Swiss chocolate as the name for a group of products of repute will be
confused into thinking that Swiss Chalet is a member of that group by reason
of the use of the name Swiss Chalet. It is likely that the number who think that
will be smaller than the number for whom there will be no confusion but, in
my view, it is still likely to be a substantial number. It follows that on this issue
the plaintiffs succeed."
The question whether or not there had been, or was likely to be, confusion
between the Cadbury product "Swiss Chalet" and chocolate made in Switzerland
was a question of fact for the judge who had heard the witnesses; and who had a
much better opportunity than this court can have to evaluate what he described as
the "flavour" of the evidence. I think it important for an appellate court to resist
the invitation—even, at times, the temptation—to retry what are in essence "jury"
questions on the basis of witness statements and transcripts of evidence.
Notwithstanding the powerful submissions of Mr Bloch Q.C., based on a detailed
analysis of the record, I think that invitation must be resisted in the present case.
The judge recognised that the issue of fact was a difficult one; but he approached it
with care and on the correct basis. He reached a conclusion upon it which cannot
be regarded as perverse. For my part I think it would be wrong to set that
conclusion aside.
The respondents' notice
50
I now turn to consider a point raised by way of respondent's notice. The
respondents invite the court to re-examine the judge's view as to the precise terms
in which the product in respect of which they claim protection ought to be
described.
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15
[1999] R.P.C.
[NO. 23]
COURT OF APPEAL
CHADWICK L.J.
I have already set out the terms of paragraph 6 of the amended statement of
claim. Paragraph 6(d) was further amended at trial to include the additional
descriptive words:
"Neither the particle size nor the ratio of fat to particle size is defined in any 5
regulation. Further there is no universally accepted method of defining
particle size. For the purposes of this litigation reliance is placed on the 84 per
cent Malvern Master Sizer Laser Defraction method (including where
necessary a correction factor) as described by Alan Sideaway. The Swiss
chocolate manufacturers (as defined above) combine a fat percentage of over 10
about 30 per cent with a particle size (84 per cent as above) of under about
twenty microns in producing the said smooth texture of Swiss chocolate."
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"If tomorrow many of those manufacturers were to decide to make lower
quality chocolates containing some CBE, they would be free to do so. In the
fullness of time this might impact adversely on the cachet which attaches to
the designation 'Swiss chocolate'. However, if they continue to meet Swiss
food regulations, they will no doubt be entitled to call their products Swiss
chocolate at home. I can see no reason for denning the class of products
entitled to bear that designation any more narrowly than chocolate made in
Switzerland in accordance with Swiss food regulations."
That finding is the subject of a respondents' notice. It is said that the judge ought
to be held that the distinctive reputation of Swiss chocolate in this country resided
in products which had not only the characteristics described in sub-paragraphs (a)
and (b) of paragraph 6 of the amended statement of claim—that is to say,
chocolate made in Switzerland in accordance with Swiss food regulations—but
also the characteristics described in sub-paragraphs (c) and (d) of that paragraph—that is to say, no added vegetable fat and a smooth texture. In his
submissions in this court Mr Thorley Q.C., counsel for the respondents, did not
press the contention that the product description should include sub-paragraph
(d). But he did seek to persuade us that the description of his clients' product
ought to include reference to the absence of added vegetable fat—in particular the
absence of added CBE. He drew our attention to the observations of Lord
Diplock in the Advocaat case, [1998] R.P.C. 31 at page 98, lines 20 to 24—to which
the judge himself had referred in a passage at [1998] R.P.C. 117,133, which I have
already cited—as to the need to define with reasonable precision the type of
product that has acquired the reputation, so that the members of the class entitled
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The judge rejected the submission that the description of the product in respect
of which protection was claimed in these proceedings should be restricted by the
inclusion of those additional words. He rejected, also, the submission that the
description of Swiss chocolate should be limited in the way pleaded in subparagraph (c) in paragraph 6 of the amended statement of claim, that is to say, by
excluding chocolate which included vegetable fat—in particular, Cocoa Butter
Equivalent ("CBE")—as an ingredient. He recognised, as appeared from the
evidence, that none of the Swiss Chocolate Manufacturers used CBE or any
vegetable fat in their chocolate, notwithstanding that, under current Swiss
regulations, they were permitted to do so, subject to a five per cent limit. But he
said this, [1998] R.P.C. 117, at page 135 line 32 and following:
CHOCOSUISSE UNION V. CADBURY LTD
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[1999] R.P.C.
Remedies
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on
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The judge granted the injunction sought, restraining Cadbury from passing off
chocolate as Swiss chocolate by the use of the name "Swiss Chalet" or any similar
name. He ordered an inquiry as to the damages suffered by the individual
plaintiffs by reason of the previous acts of passing-off; which, on the facts as he had
found them to be, covered the period between October 1994 and July 1997 when
(for reasons unconnected with the litigation) the Swiss Chalet product was
withdrawn from the market. The injunction was clearly an equitable remedy. So
also, as it seems to me is an inquiry as to damages—see Slazenger & Sons v.
Spalding & Brothers [1910] 1 Ch. 257, 21.
Mr Bloch Q.C. has submitted before us, as he submitted to the judge, that the
respondents were debarred from any remedy by conduct to which he applied the
description "unclean hands". The submission was based on conduct of Lindt and
Suchard which, it was said, had misled the public into thinking that chocolate not
made in Switzerland was made there. In the light of the finding that in October
1994 a significant section of the public identified Swiss chocolate as chocolate
made in Switzerland, the relevant conduct must be conduct after October 1994.
I have already indicated that Suchard's conduct, in relation to the marketing of
Toblerone prior to 1992, did not lead to a belief in any significant section of the
public that that product was chocolate made in Switzerland. Since 1992 Toblerone
has been made in Switzerland. It cannot be said that anything done by Suchard
after 1992 in relation to Toblerone has contributed to any confusion or has
otherwise been misleading.
I have indicated, also, that Suchard's conduct in relation to Milka prior to
October 1994 did not lead to any significant belief that that product was made in
Switzerland. Since that date, Milka has continued to be manufactured in Germany
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to share in that goodwill can be identified with similar precision. The class whose
goodwill is to be protected from passing-off comprises those traders (and only
those traders) who have supplied and still supply to the relevant market (in this
case the market in England and Wales) products which possess those recognisable
and distinctive qualities.
In my view there is no doubt that the evidence which was before the judge
established that the product which the respondents, and those whom they
represent, supply to the English market—and to which they seek to attribute the
designation "Swiss chocolate"—does possess each of the characteristics described
in sub-paragraphs (a), (b) and (c) of paragraph 6 of the amended statement of
claim; and that (in Switzerland at least) the absence of added vegetable fat is
regarded by some as an important and relevant characteristic. In these circumstances, it seems to me that the respondents are entitled to ask the court to
recognise that the product in respect of which they seek protection against
passing-off is the product so described; and that they do not seek protection in
respect of a product described in the less precise terms adopted by the judge.
Rightly or wrongly they regard a product which satisfies the narrower description
as being of a higher quality than a product which includes added CBE. They do not
supply the latter product; they do not wish to do so; and they do not seek
protection for any goodwill which might attach to its reputation. Accordingly, I
would uphold the contention in the respondents' notice.
[NO. 23]
COURT OF APPEAL
CHADWICK. L.J.
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The applications to adduce further evidence
In relation to the matters to which I have just referred, Cadbury sought to
introduce new evidence before us. That was evidence of facts which had happened
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and marketed under a label which states that fact. I agree with the judge that there
is nothing in the conduct of Suchard, after 1994, which would make it inequitable
to grant the remedies of injunction and an inquiry as to damages which it seeks.
The position of Lindt differs from that of Suchard. The evidence shows that,
since 1994, Lindt has achieved a significant penetration of the United Kingdom
market in relation to its product "Excellence" manufactured in France. The
contention is that, by marketing its product "Excellence" in England in
circumstances which are said to suggest that that product is made in Switzerland,
Lindt are debarred from equitable relief; including, in particular, the remedy of
injunction.
It is necessary to keep in mind that the packaging in which Lindt market the
Swiss branded chocolate made in France does not state that that chocolate is made
in Switzerland. What that packaging does emphasise, of course, is the powerful
brand name "Lindt". The packaging states, also, that Lindt are Swiss Chocolatiers.
It gives an address for Lindt in Switzerland. But it also contains an indication,
albeit in small print, that the product is manufactured in France. What the
packaging does not do—in contrast to Cadbury's "Swiss Chalet" product—is to
use the word "Swiss" in any prominent position so as to suggest to the buying
public that the product is Swiss chocolate rather than Lindt chocolate. Lindt relies
on the power of its brand name "Lindt" to suggest to the public that the chocolate
has some degree of Swissness about it.
The manner in which Lindt has marketed its Swiss branded chocolate under the
name "Excellence" has clearly been a matter of some concern to the trade
association, Chocosuisse. That appears from the transcript of Mr Rolf Bloch's
evidence at the trial. The view which the judge took was that Lindt recognised that
concern and were anxious to ensure that nothing that it did would be regarded as a
contravention of the restriction which the association seeks to put on the
marketing of chocolate as Swiss chocolate. There have inevitably been delays and
hiccups while Lindt has sought to adjust its marketing of Swiss branded chocolate
to meet the concerns of the association. But the evidence before the judge showed,
first, that Lindt recognised a need to do that; and, secondly, that Lindt were taking
steps, acceptable to the association, towards the end. In those circumstances I
would not think it right to debar Lindt from a remedy of injunction on any ground
characterised by the words "unclean hands".
It is, however, necessary to consider whether the activities of Lindt in relation to
its Swiss branded "Excellence" chocolate have led to such confusion in the
designation Swiss chocolate since October 1994 as to make it no longer
appropriate to grant an injunction in order to protect the Swiss Chocolate
Manufacturers' goodwill. That question arises, as it seems to me, if the state of the
market as at October 1997, when the judge came to consider the matter, was such
that there was no longer any goodwill to be protected in the words "Swiss
chocolate"; notwithstanding that there had been such goodwill in October 1994.
The judge did not take the view that the market had become so confused by
October 1997 that there was no longer any goodwill to protect; and he did not
refuse to grant an injunction on that ground. In my view it would not be
appropriate for this court to interfere with that exercise of the judge's discretion.
CHOCOSUISSE UNION V. CADBURY LTD
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[1999] R.P.C.
15
The first respondent's title to sue
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I return to a matter to which I referred earlier in this judgment: the first
respondent's title to sue. It was accepted before the judge that Chocosuisse could
bring proceedings on its own behalf in passing-off to prevent the reduction of its
membership which might be caused if the designation "Swiss chocolate" became
unprotectable in England; but that it could not sue in a representative capacity.
That was said to follow from the decision in Consorzio del Prosciutto di Parma v.
Marks & Spencer pic [1991] R.P.C. 351. The plaintiffs, however, reserved the right
to argue in this court that Chocosuisse did have the right to sue in a representative
capacity; and by way of cross-appeal they challenge the judge's finding on that
point.
Cadbury, on the other hand, now challenges the judge's finding that Chocosuisse had standing to sue on its own behalf so as to prevent the reduction of its
membership. The grounds of that contention are that Chocosuisse neither alleged
nor adduced any evidence (or any sufficient evidence) that it had any reputation
within the jurisdiction of the English court, or that it had any actual or potential
members within this jurisdiction or that it had suffered or was likely to suffer any
damage by reason of any reduction in the number of any actual or potential
members.
The ability to sue in a representative capacity is conferred by Order 15, rule 12
of the Rules of the Supreme Court 1965. Rule 12(1) provides:
"Where numerous persons have the same interest in any proceedings, not
being such proceedings as are mentioned in rule 13, the proceedings may be
begun, and, unless the court otherwise orders, continued, by or against any
one or more of them as representing all or as representing all except one or
more of them."
Rule 13 is concerned with the representation of interested persons who cannot be
ascertained. It has no application in a case like the present.
The requirement under Order 15, rule 12 is that the representative plaintiff
should have the same interest in the proceedings as the person that he purports to
represent. That, as it seems to me, requires a consideration of two factors: first,
does the plaintiff have any interest which would entitle him to bring proceedings;
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since the trial and of which Cadbury would not have been in a position to put in
evidence at the trial. In that sense the evidence satisfies the first of the
requirements in Ladd v. Marshall [1954] 1 W.L.R. 1489. Further, there is no
reason to doubt its credibility; so the third of the Ladd v. Marshall requirements is
also satisfied. But the second requirement—that the evidence would probably
have had an important influence on the result of the case—is not satisfied. The new
evidence is (if I may put it in the vernacular used by Mr Thorley) is "more of the
same". It reinforces the evidence which the judge had to consider. We were
satisfied that the judge would have come to much the same view on this point if it
had been available and placed before him.
For those reasons we refused the application by Cadbury to adduce further
evidence; and, having refused that application, we refused the associated
application by the respondents to put in their own further evidence in answer to
that further evidence.
[NO. 23]
COURT OF APPEAL
CHADWICK L.J.
and secondly, if he has some interest, is that interest the same interest as those that
he seeks to represent?
We were referred to the decision of Sir Richard Scott, Vice-Chancellor, in The
Scotch Whisky Association and others v. JD Vintners Ltd [1997] Eur. L.R. 446. As
its name suggests, that action was brought by The Scotch Whisky Association. It 5
was accepted in that case that the Association did not have a cause of action in its
own right. The Vice-Chancellor records that at page 452:
10
Those words are directly apposite to the claim, made in the present case, that 15
Chocosuisse has an individual right to sue. However, when a similar point arose in
the Parma Ham case, Morritt J. accepted that the Consorzio could sue in its own
right. He dealt with the point at page 357 in [1991] R.P.C. 351. When the matter
went to the Court of Appeal, Nourse L.J. said this, at page 367, line 51:
20
"In his judgment Morritt J. dealt first with the Consortium's motion for an
interlocutory injunction. But in dealing with that he had necessarily to start
with the first two grounds relied on by the defendants in their application to
strike out, both of which went to the Consortium's title to sue. By that stage
the defendants had accepted that the Consortium was a body corporate duly 25
established under the law of Italy and the judge held that it was entitled,
under the English rules of conflict, to sue on its own behalf. That entitlement
is not in dispute."
The Court of Appeal then went on to consider the question of title to sue in a
representative capacity.
The position, therefore, on this first question is that it seems to have been
accepted, both by Morritt J. and by this Court in the Parma Ham case (but without
argument) that a trade association has locus to sue in its own right; but that
contention was expressly rejected by the Vice-Chancellor in The Scotch Whisky
Association case.
For my part, I adopt the reasoning of the Vice-Chancellor on this point. I am
unable to identify any business interest or goodwill which the trade association,
Chocosuisse, is entitled to protect in an action in England for passing-off against a
trader. Chocosuisse does not, itself, manufacture or sell Swiss chocolate. It is said
that its business depends on maintaining the reputation of Swiss chocolate
throughout the world, including in England and Wales. But nothing that Cadbury
is said to have done can be regarded as a passing-off in relation to that business.
Indeed, if anything, Cadbury's activities are of benefit to the business which
Chocosuisse carried on, in that these activities tend to reinforce the perception
that there is a need for an active trade association. But the need for an active trade
association does not, of itself, give that association a locus to sue in its own right.
If there is no individual right, then it seems to me that Order 15, rule 12 can be of
no assistance. But, even if there were an individual right, it is not the same right as
the right of the Swiss Chocolate Manufacturers whom the association seeks to
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"It is, as I understand it, accepted by the plaintiff that the Association does
not have a cause of action in passing off. If that is accepted, it is, in my opinion,
rightly accepted. I cannot see on what basis a trade association can maintain a
passing off action based upon conduct which constitutes a passing off by the
defendant of its products for those of the members of the trade association."
CHOCOSUISSE UNION V. CADBURY LTD
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[1999] R.P.C.
represent. That was the view taken by Morritt J. in the Parma Ham case and
affirmed by the Court of Appeal in that case: per Nourse L.J. at page 368, lines 15
to 31.
In The Scotch Whisky Association case the Vice-Chancellor indicated that he
formed the opposite view on this point. He said at page 452:
"The trade association, if it sues in a representative capacity, can perhaps
maintain such an action but that would be to base the action on the combined
causes of action of its members. Such an action would not be based upon a
cause of action vested in the Association itelf."
20
"I can, however, see considerable reason why a trade association such as the
Scotch Whisky Association should be permitted to sue in a representative
capacity on behalf of its members and to seek injunctions to restrain any
breaches that may be adversely affecting the interests of its members. I can
see no reason why a trade association, on the other hand, should assume in its
own right and claim damages in its own right for breaches of a Regulation that
adversely affects the interests of its members."
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I respectfully agree with the Vice-Chancellor's view that it would be convenient if
a trade association were permitted to sue in a representative capacity on behalf of
its members. But Ifindit impossible to reach the conclusion that that is permitted
under the language of Order 15, rule 12(1) in circumstances where, as will usually
be the case, the trade association either has no interest of its own capable of
founding a cause of action; or, if it has any interest of its own, that is not the same
interest as that interest of its members. The remedy lies in an alteration to the
Rules of Court. It does not lie in bending those Rules to allow a representative
action in circumstances which, as drawn, they were not intended to cover.
For those reasons I take the view that Chocosuisse does not have locus to sue in
these proceedings, whether in its own right or as a representative of the Swiss
chocolate manufacturers.
The costs appeal
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The final matter to which I should refer is the second of the two appeals which
are before us. By a second order, also made on October 29,1997 (to which I will
refer as "the costs order"), the judge ordered that Cadbury should pay to the
plaintiffs, and to Suchard Ltd and Lindt & Sprungli (U.K.) Ltd (two United
Kingdom subsidiaries of the Swiss parents), their costs of an application to set
aside subpoenas dated September 24,1997 served by Cadbury on Suchard Ltd and
Lindt and Sprungli (U.K.) Ltd. Cadbury's appeal against that order is also before
us, but it has not been suggested that it can succeed if the principal appeal fails.
Accordingly, it is not necessary for me to say more about the appeal against the
subpoena costs order.
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15
But the word "perhaps" is an important word of qualification. It suggests that the
Vice-Chancellor was not reaching a concluded judgment on the point. He went on,
however, at page 453 to say:
[NO. 23]
COURT OF APPEAL
CHADWICK L.J.
Conclusion
For the reasons I have sought to give I would dismiss the principal appeal. It
follows that the appeal against the costs order must be dismissed also.
5
BROOKE L.J.
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I have prepared a short judgment of my own in order to review the state of the
evidence before the judge which related to the reputation of Swiss chocolate in the
English market in October to November 1994 when the plaintiffs' cause of action,
if any, arose.
This evidence showed how thefirstchocolate factory in Switzerland was opened
in 1819, and how Swiss chocolate-makers came to lead the world in the closing
years of the nineteenth century. It was common ground that the Swiss invented
milk chocolate. In 1875 Daniel Peter of Vevry discovered a way of combining milk
and chocolate to produce a solid form of milk chocolate, as opposed to the milky
chocolate drink which had been consumed for the previous 200 years. Four years
later Rodolphe Lindt of Berne invented a way to make smooth chocolate which
melted on the tongue.
Swiss chocolate-makers have always promoted export sales. Philippe Suchard
opened his factory in 1826, and Suchard chocolate won awards at six exhibitions in
this country between 1862 and 1899. Daniel Peter, for his part, was so impressed
when a pharmacist from a small English town on holiday in Switzerland ordered
more than £100 worth of his new milk chocolate over a two-year period that he
paid several visits to this country in order to build up a market here. He wrote at
the time that if a town of 8,000 inhabitants could consume more than £100 a year,
then the six million inhabitants of London could easily consume more than 40
tonnes of his chocolate. A brochure recently published by Cadbury paid tribute to
the fact that in 1897 the Swiss were dominating the milk chocolate market with a
product of superior taste and texture produced by Mr Peter. By 1903 his sales
totalled SF6 million, of which 50 per cent were generated in this country, and only
5 per cent in Switzerland. In 1912 Switzerland had a 55 per cent share of the world
chocolate export market.
In the first year of this century the Swiss chocolate manufacturers banded
together to form an association to represent the general interests of their industry,
and ever since then there has always been an organisation fulfilling this role, the
latest being the first plaintiffs, Chocosuisse, which was formed for this purpose in
1946. Its present chairman, Mr Rolf Bloch, told the judge that hundreds of actions
have been started to stop people using the description "Swiss" in connection with
chocolate products not manufactured in Switzerland, and the agreements which
the members of Chocosuisse have made with each other from time to time have
enabled that organisation to exercise control over its members. In this way it
ensures, so far as possible, that they do nothing to imperil the reputation and
cachet of Swiss chocolate.
The evidence showed that sales of Swiss chocolates to this country increased
from 170,000 kilograms in 1957 to just over a million kilograms in 1977 and nearly
7 million kilograms in 1995. In 1994 the United Kingdom was second only to
Germany as the largest importer of Swiss chocolates. In general, the English
market for Swiss chocolate has been dominated by three names, Lindt, Suchard
and Toblerone, and the judge heard evidence relating to each in the years up to
October-November 1994 when Cadbury first launched its product called Swiss
CHOCOSUISSE UNION V. CADBURY LTD
[1999] R.P.C.
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Chalet onto the English market. As Robert Walker J. held in Barnsley Brewery
Company Ltd v. RBNB [1997] F.S.R. 462, 470, this is therefore the date at which
the goodwill attaching to the plaintiffs' reputation in this country, if any, falls to be
assessed for the purpose of these proceedings.
5
The Lindt company's fortunes were dominated for most of this period by its
former chairman Mr Rudolf Sprungli, who retired from the Board in the
mid-1980s after 40 years' service. Lindt started selling its products here in 1932,
and for all practical purposes it did not advertise in this country at all. The
company was described as being relatively conservative while Mr Sprungli was its
10 chairman. In the early 1970s Lindt's Swiss chocolate products tended to be
supplied exclusively to specific quality retailers in each English town. In most
towns there would be a good quality confectionery shop which contained a section
selling different types of continental chocolate, including Swiss and Belgian
chocolates, and the market for Swiss chocolate was a niche market which built up a
strong reputation for high quality chocolate. During the 1970s the customer base
for Lindt products in this country widened, first by sales through more
confectioners, and also through department stores and gourmet shops, and then
through newsagents, chainstores and selected wholesalers. There was evidence
that the prices for Swiss chocolates were higher than those for chocolates
manufactured by companies like Cadbury.
All the Lindt products sold in this country until 1994 were imported from its
Swiss factory, apart from a range of chocolate animals (such as Easter bunnies)
which were manufactured here and produced solely for the U.K. market. The
~r judge mentioned in this context what he called trivial instances of the word
"Swiss" being used on Lindt Easter eggs some years ago when the shell was made
of English chocolate although the contents of the eggs were Swiss chocolates.
Lindt's U.K. sales increased gradually in the 1980s, a period in which the
company went through a period of comparative turmoil, with five chief executives
30 in as many years following Mr Sprungli's retirement before the present chief
executive, Mr Tanner, was appointed in 1993. At that time the company had no
lead products, and Mr Tanner considered that its strength lay in the wide variety of
its products. He found, however, that the company's total annual sales to the U.K.
at that time were worth only about £8 million, or less than 1 per cent of the total
35 U.K. confectionery market, and he set in hand moves to increase its market share.
The company decided to look at Europe as a single market, and to focus its
attention in particular on the manufacture of chocolate bars in its two factories in
Switzerland and France. The French factory had the capacity for developing
chocolate bars of a higher cocoa content, of which the company sensed a market
40 need, and a new chocolate bar product called Lindt Excellence was therefore
produced there.
This product was first sold in the U.K. market in the summer of 1994. It had
achieved sales of only just over £250,000 by June 1995, although they increased
quite substantially to over £3 million in the year 1996-97. It follows that in October
45 1994 there had been very little penetration of the U.K. market by Lindt products
not manufactured in Switzerland, apart from the chocolate animals and Easter
eggs which had always been manufactured here. The position had changed quite
radically by 1997, following a marketing campaign which included television
advertising in the London area, but this change since the plaintiffs' cause of action,
50 if any, accrued could only affect the remedy to be granted by the court and not the
[NO. 23]
COURT OF APPEAL
BROOKE L.J.
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goodwill attaching to the plaintiffs' reputation in this country as manufacturers of
Swiss chocolate in the autumn of 1994.
The judge made no express findings as to Lindt's penetration in this country
prior to 1994, but the evidence I have recited was essentially unchallenged.
So far as Toblerone was concerned, there was a manufacturing capacity at
Meltis's factory at Bedford between about 1945 and 1992, and sales of Toblerone
in this country were maintained during this period partly from this Bedford
factory and partly by imports from Switzerland. Suchard bought the Tobler
company in 1975 and it was itself bought by a German company in 1982. Following
a merger with Kraft in the late 1980s the company, now known as Kraft Jacobs
Suchard (Schweiz) AG, decided to stop manufacturing in England, so that since
1992 all manufacturing of Toblerone has taken place in Berne. When made in
Switzerland, the product bears upon it, sometimes in large letters, the words
"Swiss" or "'Swiss chocolate", which did not appear when the product was made in
England.
Suchard (U.K.) had a plant at Welwyn Garden City which manufactured a
number of its products for quite a long time until it shut down in 1975. When one of
the witnesses, whose evidence was not questioned, joined the Meltis factory in
1967 he found that it was manufacturing liquid chocolate which was then taken for
shaping at Suchard's Welwyn Garden City plant. He suspected that few people
realised that Toblerone and these Suchard products, such as Velma, Bitra and
Milka, were made in the United Kingdom. He did not recall any explicit publicity
to the effect that these products were made in Switzerland, but Tobler and
Suchard did not, so far as he could recall, do anything to correct the general view
that they were Swiss made.
Suchard (U.K.) then bought the Meltis factory and the merged company known
as Tobler Suchard produced a range of its products there for a time. One of the
English witnesses told the judge that its sales then slumped while Lindt's Swiss
chocolate sales increased, and soon afterwards the U.K. manufacture of Suchard
products (other than Toblerone) for all practical purposes ceased, and they were
replaced by Suchard's Swiss chocolates imported from Switzerland. The judge was
told that people who bought Lindt chocolate and Suchard chocolate at that time
were possibly connoisseurs who knew the difference between a Swiss chocolate
and a U.K. produced chocolate, and they were prepared to pay a higher price for
Swiss chocolate.
Following the German takeover, nine or ten of Suchard's Milka products, now
manufactured in Germany, were launched in this country in 1989 with a £8 million
advertising campaign. The product was cheaply priced in order to compete with
Cadbury and Rowntree products, and the evidence before the judge was that this
campaign was a failure. In the year ending June 1995 total sales of Milka bars in
this country only just topped £1 million. The judge was told that the main reason
why the product was comparatively unsuccessful was because people who wished
to buy a quality Swiss or Belgian chocolate would purchase a quality Swiss or
Belgian brand at a premium price.
The judge heard a certain amount of evidence about the advertising methods
used by Suchard in connection with this launch, on which he made nofindings.The
Milka bars featured a lilac cow in a meadow set against a background of
snow-capped mountains, and some of the original advertising material showed a
link with Switzerland, although the product was not marked "Swiss Chocolate",
and the words "Made in Germany" featured on it.
CHOCOSUISSE UNION V. CADBURY LTD
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The judge found that it was likely that during the period during which
Toblerone was made in England, some members of the public assumed that it was
made in Switzerland, but that Suchard's labelling policy had always been
consistent with ensuring that the words "Swiss chocolate" retained their accurate
geographical connection and maintained their reputation. So far as Milka was
concerned, the judge found from the 1997 evidence that a small number of
members of the public might still think that Milka was made in Switzerland.
Evidence adduced to the judge by Chocosuisse showed that total sales by Swiss
chocolate manufacturers into the U.K. market stood at about 2 million kilograms
each year in the 1980s until they rose sharply to 3.6 million kilograms in 1989.
After a fall in 1990, the 1989 total was repeated in 1991, and there was then a
steady rise to 4.8 million kilograms in 1993 and an even sharper rise to 7.2 million
kilograms in 1994. Cadbury for its part adduced evidence relating to U.K. sales of
Toblerone, Milka and Lindt Swiss and non-Swiss chocolate blocks and bars for the
year which ended in June 1995, but these totalled less than 2 million kilograms,
and it proved impossible to reconcile these two sources of information and
produce an overall picture of the sales of Swiss-manufactured chocolates in
England and Wales in 1994. We were told, for instance, that some supermarkets
and department stores, the specialist chocolate shops like Thornton's and
Lessiter's, and the duty-free shops did not feature in Cadbury's evidence.
The judge attributed considerable weight to the evidence of a product selector
for Marks & Spencer pic who joined that company in 1994 and was therefore able
to speak about her customers' perceptions of Swiss chocolate at that time. Details
of her evidence are set out in the judgment ([1998] R.P.C. 117,132). In particular
she said that Swiss chocolate was sold because it provided a "point of difference"
over standard milk chocolates. Her company's Swiss chocolate, which was all
supplied by a Swiss manufacturer called Frey, was perceived by the company to
have a reputation amongst the public as a premium product, and the fact of its
Swiss origin was a "unique selling point". She explained that they made sure that
the word "Swiss" was emphasised on the label. The judge also heard that
Waitrose, Boots and Tesco sold Swiss chocolate in their stores, although he did not
hear any evidence from those companies.
Apart from the evidence of customer perception in 1997, which was two years
later in Lindt's marketing campaign, this was, in essence, the evidence before the
judge as to the penetration of Swiss chocolate in this country, and the English
public's appreciation of it, in the autumn of 1994. Mr Thorley has shown us that 12
respondents to Cadbury's 1997 consumer survey were comfortable with the
concept of "Swiss chocolate" as a specific class of chocolate and that two members
of the public gave oral evidence to the same effect. He also identified for us a total
of 31 witnesses who gave the court their favourable perception of the reputation of
Swiss chocolate in this country. The judge quoted the evidence of Cadbury's own
marketing director on this topic at pages 132-133.
On the totality of the evidence the judge found that a considerable number of
members of the public seemed to think that Swiss chocolate was different to and
more up-market than other types of chocolate, although the precise reason for
feeling that, and the respects in which Swiss chocolate was thought to differ from
other chocolates, varies from witness to witness. After referring to the evidence
from retailers, the judge said that he had come to the conclusion on all the
evidence that the words "Swiss chocolate" had acquired in England a distinct
reputation. The plaintiffs had proved that to a significant part of the public here
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15
[1999] R.P.C.
[NO. 23]
COURT OF APPEAL
BROOKE L.J.
THE LORD CHIEF JUSTICE
I agree with both of the judgments which have been delivered and have nothing
which I wish to add.
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those words denote a group of products of distinctive repuation, and the judge
considered that the actions of major retailers like Marks & Spencer, who are
experts in assessing and catering to the wishes of the public, reinforced that
conclusion. He accepted the evidence which indicated Marks & Spencer's view
that the words "Swiss chocolate" had a reputation for quality among a significant 5
part of the public, and he added, correctly in my judgment, that the fact that
members of that public had different views of what the features of the distinctive
quality are, or are incapable of defining it, was of little relevance.
I accept Mr Thorley's submission that this was a conclusion of fact the judge was
entitled to reach on the totality of the evidence, and that the judge asked himself 10
the right question, even if he did not address in terms the fact that he ought to have
answered it in relation to a date close to the start of Lindt's new marketing
campaign for its products manufactured in France. The judge then went on to
consider the class of traders who were entitled to the benefit of the goodwill which
attached to the name "Swiss chocolate", and on this and on the other issues which 15
arise on these two appeals I have nothing I wish to add to the judgment of
Chadwick L.J., with which I agree.
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