Passing off: How close is too close?

The decision of Justice Williams in the case of Clorox New Zealand v Elldex Packaging provides important guidance on when product get-up can be misleading and deceptive.

This application for an interim injunction concerned the use of the plaintiff's (Clorox) "Glad Wrap" plastic cling film packaging and that of the defendant's (Elldex) "KiWi Wrap" plastic cling film packaging.

Clorox alleged that, as Elldex's new packaging for its KiWi Wrap product was similar to Clorox's Glad Wrap plastic cling film packaging in terms of colour, layout and wording, it was likely to cause customer confusion or deception in the course of trade or constitute conduct in trade that was misleading, deceptive or likely to be so.

Clorox accordingly sued Elldex for passing off and for breach of the Fair Trading Act 1986.

The law

Williams J stated "[T]he essence of passing-off lies in a competitor marketing products as those of another competitor". His Honour adopted the five elements required for an action in passing off from the case of Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731:

• a misrepresentation,



• that is made by a trader in the course of trade,



• to prospective or ultimate customers,



• which is calculated to injure the business or goodwill of another trader, and



• which causes actual damage to the business or goodwill of the trader by whom the action is brought, or will probably do so.

Good arguable case?

According to His Honour, factors that gave rise to the context in which the injunction application had to be viewed included:

• the number of plastic cling films in the market and the fact that Clorox's Glad Wrap has by far the majority share;



• cling film is so cheap and ubiquitous that it is not something the normal customer gives much time or thought to before purchasing;



• several features of cling film packaging are essentially dictated by functionality and the nature of this type of product (e.g. shape and size presentation); and



• manufacturers and marketers of cling film have little capacity to affect the way in which a supermarket displays each manufacturer's (or its competitor's) products, nor can manufacturers/marketers control other chain or "house" specials relating to price, promotion or other factors.

On the facts, Williams J (by a modest margin) determined that Clorox had not demonstrated that it had a good arguable case for passing off against Elldex.

Although His Honour expressed considerable scepticism about Elldex's choice of colours (red, yellow and white all being colours also used by the plaintiff), he also noted that "causes of action such as this are seldom successful if the brand name is prominent on packaging unless there is proof of actual deception or deliberate imitation..."

In this instance, the brand name KiWi Wrap was a prominent feature on the Elldex brand's packaging and, at least at this interlocutory stage, there was insufficient evidence to show actual deception or deliberate imitation.

Balance of convenience

On the issue of balance of convenience, Williams J held that this factor favoured Elldex for two reasons.

The first was that KiWi Wrap's share of the market (and relative to Glad Wrap's large majority share) was so small that, provided the substantive trial was organised quickly, any damage caused by KiWi Wrap's packaging to Glad Wrap would be minimal.

Secondly, it was shown by evidence that D & A Marketing, an independent contractor to whom Elldex sold its KiWi Wrap, were the actual vendors of KiWi Wrap to supermarkets and other stores. Therefore, it "would not be right to issue an injunction affecting D & A Marketing's sphere of action without it being before the Court so that the impact of any such order on its business can be known."

Decision

While rival considerations for the two forms of packaging were "fairly evenly based", Williams J held that the overall justice of the case lay in favour of Elldex and so the application for interim injunction was dismissed.

Enquiries and information

For more information on trade mark law, please email or call Garry Williams on 64 9 916 8661.