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 15 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 25 30 35 40 45 50 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 826 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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. 827 5 10 15 20 25 30 35 40 45 50 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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 25 30 35 40 45 50 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 828 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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: 10 15 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 20 25 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: 30 "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." 829 35 40 45 50 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 "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." 5 CHOCOSUISSE UNION V. CADBURY LTD [1999] R.P.C. 830 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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. 50 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: 5 1f) 15 20 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. 50 831 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 "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? 30 35 40 45 50 "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: 832 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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." 5 10 15 "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. 833 20 25 30 35 40 45 50 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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: 5 20 25 30 35 40 45 50 "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." 834 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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." 835 ]Q 15 20 ^ ~r 40 45 50 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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. 836 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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." ^0 ^5 ^0 35 40 45 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 837 50 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 "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 5 10 20 25 30 35 40 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. 838 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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." 15 20 25 "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 839 30 35 40 45 50 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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 5 10 [1999] R.P.C. Remedies 25 on 3^ 40 45 50 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 840 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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. 5 10 15 20 25 30 35 40 45 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 841 50 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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 5 10 [1999] R.P.C. 15 The first respondent's title to sue 20 25 30 35 40 45 50 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; 842 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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 843 30 35 40 45 50 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 "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 5 [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." 25 30 35 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 40 45 50 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. 844 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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. 845 10 15 20 25 30 35 40 45 50 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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. 846 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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. 847 5 10 15 20 25 30 35 40 45 50 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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 5 10 20 25 30 35 40 45 50 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 848 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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. 20 25 30 35 40 45 50 849 Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015 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. Downloaded from http://rpc.oxfordjournals.org/ at East Carolina University on April 21, 2015