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Cite as: [1998] EWHC Patents 316

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Gromax Plasticulture Ltd v. Don & Low Nonwovens Ltd [1998] EWHC Patents 316 (12th June, 1998)

CH 1996 G No. 4121

CH 1996 G No. 1484

CH 1996 G No. 6914

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

 

Before: THE HON. MR. JUSTICE LINDSAY

 

B E T W E E N

 

Gromax Plasticulture Ltd

Plaintiff

 

- and -

 

 

Don & Low Nonwovens Ltd

Defendant

 

Mr Richard Hacon and Miss Jacqueline Reid instructed by Messrs Prettys for the Plaintiff
Mr Iain Purvis instructed by Messrs Taylor Vinters for the Defendant

Hearing dates: 1st April-8th April 1998

 

JUDGMENT

This is the official judgment of the court and I direct that no further note or transcript be made

DATED: 12th June 1998

MR JUSTICE LINDSAY:

1. These proceedings relate to a type of crop cover used in agriculture. It is translucent and about as thick as, but far less rigid or weighty than, a heavy writing paper. Rain, air and sunlight may pass through it. It tears and separates if pulled apart by hand rather than stretching, as might a plastic sheet of film-structure. Although made from fibres it is not woven but is spun-bonded. It appears to have on it a pattern of very small rectangles or honeycomb shapes or holes. Its colour is a greyish-white but it is transparent enough, for example, easily to be read through. Its fibres cannot be detected as such by the naked eye but are short lengths of polypropylene. Its formal description is "Spun-bonded non-woven polypropylene sheeting" but it will be convenient to call this material "fleece". In agriculture it is used in rolls of great length and of varying width, laid on the ground where crops grow or are to grow, or over light hoops, again where crops lie or are to lie underneath. I will have to return later to a description of the functions which the fleece serves.

2. The proceedings consist of three actions and one counterclaim, all coming on for hearing together. It is unnecessary at this stage to set out which action is concerned with what claims; it is more convenient to see what issues are raised, irrespective of in which proceeding. In order to do that it is first necessary briefly to describe the parties.

3. Gromax Plasticulture Ltd ("Gromax") was either acquired "off the shelf" as a company or was incorporated in late September 1989. It was called into existence in its present form by Mr Nicholas Crame, at all material times its Managing Director. Gromax has proved successful and the fleece is only one of a number of products which it markets, all concerned with applying plastics in one form or another to the growth and protection of crops.

4. Mr Crame had graduated from Nottingham University in May 1980; he has a B.Sc. in Animal Science. He gave evidence in the proceedings. I have no difficulty in believing that in his industry he is regarded as a lively and knowledgeable salesman, more willing than most to listen, consult and to advise in order to find what his farmer and grower customers need in the way of plastic growing aids and how those needs can, if possible, be satisfied by Gromax.

5. Although on their face the proceedings appear to concern or to have concerned other Don & Low companies it has been unnecessary to distinguish between them and I shall therefore generally refer only to Don & Low Nonwovens Ltd, which company, ("DLN"), was formed in 1986. It is a wholly owned subsidiary of Don & Low Ltd, which in turn is a wholly-owned subsidiary of Shell. It is, therefore, a company with massive resources behind it. That is just as well, as the machinery which makes the fleece costs, literally, millions of pounds. DLN commonly use the name "Daltex", signifying Don & Low Textiles, on fibres of their manufacture.

6. The issues raised in the proceedings are, at first blush, divisible into two: those concerned with passing-off and those with registered trade marks. But the two are not wholly separable. In circumstances I shall later describe both DLN and Gromax have come to have the identical registered trade marks "Gro-Shield" (sometimes without the hyphen) used or intended for use on the fleece. DLNís trade mark was registered well before that of Gromax but the two registered marks, although both used in relation to use of the fleece as crop cover in agriculture, are registered in different classes. As to the issues raised, whilst my findings on some questions will obviate the need to deal with others, in the abstract the questions arising, as posed by Counsel, are these:-

(i) Is the DLN mark valid? It is argued by Gromax that it is invalid (not here distinguishing between invalidity and revocability where revocation would be appropriate):-

1. (a) because of an earlier right thereto vested in Gromax, being one which Gromax is still able to assert despite its alleged acquiescence in use of the mark by DLN. This possibility is not, I think, pressed by Gromax.

2. (b) because it was applied for by DLN in bad faith;

3. (c) because its use by DLN is liable to mislead the public;

4. (d) because, although the mark has undoubtedly been used by DLN, such use has been, it is said, in the wrong class and therefore does not amount to use within the 1994 Trade Marks Act and, correspondingly, the mark is to be regarded as unused and on that account revocable and fit to be revoked.

(ii) If, despite those objections, DLNís mark is valid, then has there been infringement of it by Gromax?

(iii) Is Gromaxís mark valid? Here Gromax anticipates argument that it is invalid:-

5. (a) because, if DLNís mark is valid, Gromaxís mark, later in time, would be invalid as being the same mark for similar goods;

6. (b) because, if DLNís mark were not valid, then, in any event, by the time Gromax came to register DLN already had an earlier right by way of its ownership of the goodwill in the Gro-Shield mark such that Gromaxís registration would be invalid;

7. (c) because Gromax applied for it in bad faith.

(iv) Passing-off:-

8. Is the goodwill in the business represented by the Gro-Shield name vested, as Gromax asserts and as DLN denies, in Gromax alone? In more detail:-

9. (a) If DLNís mark is valid, would that registration not have given DLN an exclusive right such that use of the mark "Gro-Shield" by Gromax has been and would, if unrestrained, continue to be a passing-off?

10. (b) If DLNís mark is not valid, does not the relevant goodwill nonetheless belong to DLN as manufacturer, such that, again, use by Gromax has been and would, if unrestrained, continue to be passing-off?

11. (c) If Gromaxís mark is valid would not any revived use of "Gro-Shield" now by DLN represent passing-off? I say "revived" use as DLN is not for the moment using the name;

12. (d) Even if Gromaxís mark were invalid, did it not own the goodwill in the business associated with the Gro-Shield mark at the 8th July 1996 (when such written agreement as there had been between DLN and Gromax may have expired) so that thereafter use by DLN would amount to passing-off?

(v) What relief, if any, is appropriate in the light of the answers given to such of the above issues as shall have transpired to have required answer?

13. Before these issues can be returned to in more detail it would be useful to set out some, at least, of the relevant events in chronological order.

7. In July 1989 Mr William Kelly, then DLNís Business Development Manager, was approached by Mr Crame. They met at DLNís premises at Forfar. Mr Crame explained what his employment then consisted of. He was selling at the time some 40 tons of fleece a year. He was looking to leaving his employer and start-up on his own through the medium of a new company. At the time DLN were the only manufacturers in the U.K. of the fleece. Other manufacturers in Europe were using identical vast machines to make what was very similar fleece although, no doubt, the thicknesses, weights, strengths and consistency of the products varied from manufacturer to manufacturer and from time to time. DLN were looking to find new and specialised markets for their fleece. They did not then have an agricultural market for it. Mr Crame was, rightly, seen by DLN to be a person who had both experience and expertise in the area of selling agricultural crop cover. Accordingly DLN were interested in his proposals.

8. DLN and Mr Crame met again on the 25th August 1989. At that meeting Mr Crame explained that he or his employer was currently buying fleece from a French company, Sodoca. If DLN could show that they could give him the quality, back-up service and support he was looking for he would switch future orders to DLN. Matters such as pricing, delivery, the markets which Mr Crame would seek to develop and the support which DLN would initially give him were discussed. It was orally agreed that the product would be supplied under a mutually agreed brand name but no name was then decided upon and at that time DLN had no proposals for the name. However, at the time Don & Low had on the market a product used in the building industry called "Frameshield". It may even then have had, as it later had, other products incorporating the suffix "-Shield". Someone at DLN suggested within that organisation that the fleece should be called "Cropshield"; it was thought that would complement the existing name. However, Mr Crame at some time in the early autumn of 1989 was moving towards formation of the company he had earlier proposed to be a vehicle for his plans. It was to be called "Gromax Plasticulture Ltd". He therefore wanted the product to be called "Gromax".

9. The name for the fleece remained undecided for the time being. It is not clear that DLN mentioned its wish for the name "Cropshield" at this early stage but it seems Mr Crame had mentioned the name Gromax for the fleece without its then being either agreed or disagreed.

10. On the 4th September 1989 the Business Development Manager of DLN, Mr Kelly, wrote to Mr Crame. Points that had been discussed on the 25th August were put to Mr Crame for his approval. DLN were at that stage proposing to manufacture a specific and specified quantity of the fleece which was to be supplied exclusively to Gromax. A provisional price had been agreed. Gromaxís period of exclusivity was to be 2 years, subject to renewal. Exclusivity outside the U.K. was to be discussed as when the situation arose. The letter said:-

"The product will supplied under a mutually agreed brand name to Gromax ........."

14. DLN would give support to promotional literature up to the value of "5,000 in 1989 and a copy of a provisional draft of the proposed leafletís artwork was supplied to Mr Crame. The letter continued:-

"We would like to wish you every success in your venture and look forward to the establishment of a mutually beneficial long-term partnership".

15. There is no answering letter accepting the proposals then made and discussion continued. The proposal that DLN should manufacture a specific quantity of the fleece for Gromax was never renewed.

11. At the end of September 1989 Mr Crame either acquired, presumably "off the shelf", or caused to be incorporated the company which has come to be called "Gromax Plasticulture Ltd", one of the parties to the proceedings.

12. As part of DLNís promised support DLN and Mr Crame were put in contact with DLNís Marketing and Advertising Consultants, Baillie Marshall Design Ltd. There were meetings with Baillie Marshall at which both DLN and Mr Crame were present and at least one at which only Mr Crame was present with Baillie Marshall. In the course of the meetings DLN first proposed the name "Cropshield" and, later, Mr Crame suggested the name "Gro-Shield" as a hybrid of the "Gro" prefix from his new company Gromax and the "Shield" suffix of Don & Lowís product in the building industry. The new name was then agreed upon by DLN, Baillie Marshall and Mr Crame as the name for the fleece.

13. Mr Crame wasted no time in promoting the availability of the fleece and its new name. By the 23rd October 1989 he was sending out a sample to a grower and referring to it as "Gro-Shield", describing it as "British made on the most modern equipment". He added:-

"We can make a wide variety of widths and will be able to manufacture one to suit your system".

16. Despite that language I doubt whether anyone who pondered at all on the point could have thought that Gromax was the manufacturer, a rôle requiring a factory and the resources associated with machinery costing millions of pounds.

14. Mr Crame was busy arranging meetings with growers to discuss with them their crop cover requirements. By the 16th November 1989 he had arranged for an advertisement to appear in the trade Journal "The Grower" which, amongst a range of "Gro-" products, advertised "Gro-Shield" as a British made non-woven polypropylene crop cover.

15. There is no evidence that these early uses by Gromax of the name "Gro-Shield" were known at the time to DLN; indeed, as the relevant papers were not in Gromaxís discovery and were not produced until during Mr Haconís final speech on Gromaxís behalf, it seems they had made little enough impression, also, on Mr Crameís recollection. But even had they known, DLN would have had no reason to be displeased at Gromaxís efforts; the reference to there being a British manufacturer could only be to them.

16. On the 17th November 1989 a Press Release was prepared by DLN and their agents describing "Gro-Shield" as the first British crop cover made from non-woven polypropylene and as manufactured by DLN, who were described as launching the fleece after an investment of some "10m. Its functions were described as the protection of crops from excess sun, cold, hail, and wind and from damage from birds, game and harmful insects. It created, it was said, a micro-climate, keeping plants at a temperature significantly higher than the uncovered ground. The Press Release described DLN as having appointed Gromax as the U.K. distributor for "Gro-Shield". Further information was described as available from DLN, Mr Crame at Gromax or a Miss Harvie at DLNís Marketing Agents.

17. It is far from certain whether the Press Release was in fact sent to the Press, still less whether it led to any items in the Press, but it throws some light at least on DLNís intentions and understanding at the time.

18. As to its throwing light on Gromaxís position, Mr Crame gave evidence that he had played no part in the preparation of the Press Release; "I had no input to that whatsoever" he said. He had seemed to suggest he had received no copy of it until after it had been sent to the Press, assuming that it was sent to the Press. I do not accept that; he was sent a copy of a draft by Fax on the 16th November 1989 and it was not circulated, if it was, until the next day when he was sent another copy. With some reluctance Mr Crame, in cross-examination by Mr Purvis for DLN, recognised the import of the Press Release which he had seen before its release (if it was released). Mr Purvis asked:-

"Q. The product ........ is being promoted as a Don & Low product is it not?

A. I think it was in the context of the agreement of our letter of September 4th.

Q. Could you say "Yes" and "No" to that question? It is being promoted as a Don & Low product, is it not?

A. It is promoting the fact that they manufacture it, yes.

Q. They are launching it?

A. Yes.

Q. Is it their product launch, by the looks of it?

A. It appears from here, yes".

17. A little later Mr Purvis referred to the passage of the Press Release which said "We have appointed Gromax Plasticulture Ltd as U.K. distributors for Gro-Shield" and continued:-

"Q. Anyone reading this would assume that it was Don & Lowís product and you had been appointed as a distributor, would they not?

A. Yes, I can take that point. However, they did not actually have a product at this time.

Q. Anyone reading this would assume that it was their product and that you had been appointed as a distributor, yes?

A. Yes".

18. There is no record of Mr Crameís objecting to the terms of the Press Release. Indeed, Mr Crame himself later sent a copy of the Press Release to the journal "The Grower" but whether that led to any incorporation of any of it into that periodical or to any other effect on public perception relating to the brand Gro-Shield is unproved.

19. In November 1989 DLNís agents applied for registration at the Trade Marks Registry of the trade mark "Gro-Shield" in respect of "non-woven fabrics included in Class 24". DLN had applied for registration of "Cropshield" but that had been refused by the Registry. There was no such difficulty with "Gro-Shield" and on the 15th November 1990 the application as to "Gro-Shield" was advertised in the Trade Mark journal and by May 1991 DLN learned of the success of their application, the mark "Gro-Shield" being registered in DLNís name as of the date of the original application, 7th November 1989. The registration was in Class 24:-

"........... in respect of:

non-woven textile fabrics included in Class 24".

19. I shall need to revert to the significance and content of that Class later.

20. DLN had not told Mr Crame of their failed attempt to register Cropshield (which they did not persist with once Gro-Shield had seemed to be possible to be registered) nor of their impending or ultimate success with "Gro-Shield". For the time being and for some years Mr Crame did not know of the registration, nor is it said that any circumstances should have brought it to his notice; equally it has not been pleaded that there had been any deliberate concealment or planned secrecy about the registration on DLNís part. There was no evidence that DLN knew that Gromax was unaware of the registration.

21. Baillie Marshall set about design of a brochure describing the fleece and its application in this new market. Mr Crame contributed to the information in and design of the brochure. It was paid for by DLN as part of their agreed initial support. Before me DLN drew attention to its terms, in particular the passage that said that the fleece:-

"......... is a light-weight, non-woven polypropylene fabric made to high specification using the latest technology .......... Gro-Shield is manufactured by Don & Low Nonwovens, part of Shell, in their high technology Forfar plant".

20. Mr Crame in evidence said that Gromax wanted the name of Shell particularly to be in there. The brochure continued:-

"For further information, contact Gromax Plasticulture"

21. Gromaxís name, address, telephone and Fax number were given but, for DLN, only its name and company logo were given. The brochures were duly sent to Mr Crame for distribution to customers and for use as he saw fit. There is no suggestion that they were not so used but quite where these brochures ended up is unclear; not one of the several growers who gave evidence to me had any recollection of ever seeing one. I have no evidence of any impact which the brochures had on the public perception. This first form of brochure was, for all that, said to be in use until 1992.

22. Whilst for different fruit and vegetables and in different parts of this country and abroad different growers would use the fleece at different parts of the year, the chief use in this country has, from the start, been in the months of February to May. Unfortunately, for the growing season in 1990 DLN were not ready in sufficient quantity or perhaps at all with a product acceptable to Gromax. There was, in particular, a problem about joining widths together to make an overall width useful for growers. Accordingly Gromax bought similar fleece made by another producer, Corovin, in April 1990. It is Gromaxís own case that that was done with DLNís agreement. When Gromaxís customers received it it still had Corovinís labels upon it. It was supplied in response to orders for Gro-Shield and was invoiced to customers as Gro-Shield. DLNís initial technical problems were overcome (with help from Mr Crame) but, later on, when there were occasional production or supply problems, Gromax would temporarily and in relatively small quantities use fleece made by other manufacturers. Such later supplies passed through DLNís hands and were then almost invariably labelled "Gro-Shield" by DLN. To revert to 1990, when supplies from DLN did begin, DLN itself first referred to the material which they were supplying to Gromax in their invoices as non-woven polypropylene but, after a short while, they themselves began to refer to it as "Gro-Shield".

23. On the 7th June 1990 DLN sent to Mr Crame a letter signed by their Managing Director. Its sending may have been delayed until the 19th June. It was headed "Exclusive Distributorship of Daltex Gro-Shield". It described Gromax as confirmed as exclusive distributor of Daltex UV stabilised non-woven polypropylene crop cover fabric for areas including the U.K., mainland Europe and the Middle East. "The agreement", it read, "is initially valid for one year and becomes renewable by mutual consent on June 1st 1991". "Don & Low", it continued, "as principal will offer such promotional support to Gromax to enable sales targets to be achieved as is required by mutual agreement between the two companies". Termination by either side was to be on three monthsí notice.

24. One might think that a substantial company such as DLN would over the years have developed a commercial practice of having well-drafted agreements and of requiring copies of agreements with it to be returned endorsed by the other party to signify that other partyís agreement. However, no such signed copy has been shown to me nor anything signifying acceptance in writing in any other way. For all that, the parties accept there was an agreement between DLN and Gromax in the terms of the letter to which I have referred. Mr Hacon draws attention to the fact that under the terms of the letter there is no express provision forbidding Gromax from applying the label "Gro-Shield" to products bought from others than Don & Low; further, by reason of Gromaxís rights being exclusive, DLN could not sell its Daltex fleece for agriculture and related applications other than through Gromax. Mr Purvis, though, points to the fact that DLN were not obliged to manufacture the fleece in any particular quantities or at all to Gromaxís order.

25. There is no mention in the distributorship agreement of DLNís application for the registration of the Gro-Shield mark in DLNís name. The subject of registration is completely unmentioned.

26. As the growing seasons followed one after another Gro-Shield proved a success, due, in no small part, to the good reputation which Gromax and Gromaxís team of salesmen had amongst farmers and growers for the quality of advice and service that Gromax could offer, as well as the reputation of the fleece itself.

27. From July 1990 on, at intervals advertisements were placed by Gromax, for example in the journals "The Grower" and "The Vegetable Grower". One which was repeated has a heading "Gromax Plasticulture" and described "an approved range of polythene and polypropylene films for the professional grower ...... products specifically designed after many years practical and technical experience in plasticulture within the U.K.". In these advertisements Gro-Shield was described as "British made non-woven polypropylene crop cover ideal for early salads and brassicas". Other forms of advertisement appeared at intervals which described only Gro-Shield, giving Gromaxís name and address but no other. At trade shows and exhibitions at intervals publicity was left to Gromax who, in relation to Gro-Shield, provided only their own name and address with the manufacturer left unmentioned.

28. In terms of publicity then, leaving aside whatever, if any, effect the original brochures of 1990 to 1992 may have had and which the original Press Release of 1989 may have had, all later publicity in the growerís market would have served to link Gro-Shield only with Gromax in the sense that neither a manufacturer of the fleece was identified nor was there mention of DLN either as its manufacturer or at all.

29. On the 31st October 1991 DLN confirmed to Gromax that they would continue to trade with Gromax exclusively "for Gro-Shield/Daltex", extending their present "understanding" to the 1st June 1992.

30. On the 3rd June 1992 DLN, at Mr Crameís invitation, agreed that the notice period for termination of the agreement should be 12 months.

31. Also in or about 1992 came the introduction of a new brochure showing Gro-Shield to be in a range of other "Gro-" products available from Gromax. Gro-Shieldís functions are there described in 6 ways, of which the reduction of extremes of heat and cold, under the heading "Temperature Changes" is only one, others being "Insect Damage", "Bird and Animal Damage", "Water", "Sunlight" and the inhibition of Weeds and Water Splashes.

32. Gro-Shield continued to be made by DLN and sold by Gromax.

33. In 1996, in circumstances not fully explained nor needing to be explained to me, a rift between DLN and Gromax was caused by what Gromax regarded as defects in a large consignment of Gro-Shield intended for use and used for export to the United Arab Emirates.

34. On the 7th June 1996 DLNís Scottish solicitors wrote a letter to Gromax which asserted that DLN owned the registered Trade Mark "Gro-Shield". Until thereabouts Mr Crame and Gromax had not known there was a registered trade mark "Gro-Shield" or that DLN owned it. Gromax were required by that letter not to sell as Gro-Shield any fleece made by anyone but DLN. "Our clients" said the letter "have given no authority to use their trade mark on any product other than the specific product manufactured by them .....". In fact, there had been no express authority given by DLN for the use of a trade mark as such at all.

35. On learning of DLNís registered trade mark Gromax went to its own advisers who advised that the correct class for the fleece was Class 17 and not the Class 24 for which DLN was registered. Gromax promptly applied to register "Gro-Shield" and "GroShield" in Class 17 and told DLNís solicitors that registration was being sought (but without mentioning Class 17). The application was accepted; no conflicting interest was cited. The application was advertised on the 7th September 1996 and on the 27th December 1996 the marks were registered in Class 17 as of the date of application, 12th June 1996.

36. On the 25th June 1996 Gromax issued its Writ in the first of the three actions in front of me (1996 G. No. 6914). It seeks an injunction against passing off by DLN, an enquiry as to damages and delivery up. A Statement of Claim was served in August 1996 and was met with a Defence and Counterclaim in September. DLNís counterclaim asks, inter alia, that Gromax should be restrained from continuing to use DLNís registered mark.

37. The second of the three proceedings before me (1996 G. No. 4121) began by way of an Originating Motion of the 26th June 1996; Gromax seeks therein a declaration that DLNís registration of the "Gro-Shield" mark is invalid as it had been applied for (it was claimed) in bad faith. Revocation of the mark is sought. Later directions were given for, in effect, pleadings.

38. On the 8th July 1996 DLN gave notice to Gromax of the latterís material breach, as it was said, of the agreement of the 7th June 1990. The breach asserted was Gromaxís non-payment of a substantial sum. The agreement "and your appointment as our distributor" was said by DLN to be terminated with immediate effect. Gromax promptly responded that the agreement had not been validly determined. Whether it was or not has, I am told, been the subject of proceedings in Scotland which are not yet concluded. I am not concerned with the issue but since then there has been no co-operation between the parties and neither has licensed either to market Gro-Shield or to manufacture it. Gromax continued to market a fleece described and labelled as Gro-Shield.

39. From September 1996 onwards the two sides began correspondence separately with the Registrar of Trade Marks inviting his views and rulings upon the class appropriate for the fleece as crop cover. I shall need to return to that later.

40. On the 12th March 1997 DLN lodged, by way of Originating Motion, the third of the three sets of proceedings, asking for the invalidity of Gromaxís mark to be declared and that it should be revoked. By way of directions which I have not been taken to in any detail the three proceedings were directed to be heard together.

41. With that background I now return to the principal issues.

The validity or not of DLNís registration of the Gro-Shield mark

42. At the time at which DLNís agents applied for registration of the "Gro-Shield" mark the mark had been in use by Gromax for only a few weeks. It would then have been known to few customers and the product would have been seen and used by even fewer, possibly none. The name, although suggested by Mr Crame, had been chosen deliberately as a hybrid reflecting not only Gromaxís interest in the prospective fleece business but DLNís rôle as manufacturer. The name represented an agreement between DLN, Baillie Marshall as DLNís agents and Mr Crame. Even in the first weeks use of the name Mr Crame had laid emphasis on the fleece being British made and the product of modern equipment, thus indicating the importance of the manufacturing of the fleece, a task that Gromax was not engaged in nor was described as being engaged in. Mr Crame had not objected to the Press Release describing the fleece as launched by DLN. Even had Gromax not abandoned the point, as I apprehend it did, I would have been unable to find Gromax to have had any earlier right such as might, as an exercise of the Courtís discretion, have led to a declaration of the invalidity of DLNís registration within Section 47 (2) (b) and Section 5 (4) of the 1994 Act.

43. As for DLNís registration being in bad faith, whether within Section 3 (6) of the 1994 Act or Section 48 (1) or more generally, it is to be noted that DLN expected to be the manufacturer of the fleece. There was no other manufacturer in the country able to make a British made fleece. It had a rôle in the naming of the product, part of which name was intended to reflect its involvement. It and its agents had played a part in the content of the publicity that was intended to surround the launch of the product under its selected name and DLN contributed to the cost of the publicity. In the Press Release sent to Gromax before its release DLN described itself as launching the product. Gromax raised no objection. Whilst there is no contractual provision such that "Gro-Shield" could be made only by DLN, there is no evidence that at November 1989 either Gromax or DLN contemplated that anyone but DLN should make it. In practical as opposed to contractual terms, it suited each that DLN should manufacture it. Gromax could thus point to a manufacturer relatively close-by (suggesting that earlier delivery times would be achievable). Gromax itself emphasised "British made" and a little later was pleased with the reference to the manufacture being by a company associated with Shell, thus seeking to benefit from the combination of technical expertise and adequate capitalisation which such an association might be thought to convey. Equally it suited DLN to have a fresh application, this time in agriculture, for the product - the fleece - capable of being produced in quantity by its extremely expensive machinery. It turned out, as I mentioned, that there were severe shortcomings in quality and quantity in relation to sales for the first growing season from February to May 1990 such that for a time some fleece not made by DLN was sold as "Gro-Shield" but there was no evidence that that had been contemplated as at all likely when DLN set about registration in November 1989. Even if it had been, there was no evidence that DLN would have then been content to leave Gromax as master of the decision whether or not the mark could be applied to fleece made by any outside manufacturer, thereby reducing DLNís rôle relative to the quality of the goods to nothing. Indeed, the evidence of later events suggests otherwise; even when third-party-fleece (to call it that) was bought so that Gromaxís customers would be neither delayed nor disappointed, the almost invariable rule was that, even so, the third-party-fleece passed through DLNís hands for shaping it to the right size, packaging it and labelling it and subjecting it to some measure of quality control. Mr Hacon sought to suggest that that was for convenience only; it was for convenience but it was not for convenience only. Such operations could have been done elsewhere in the sense that there were, no doubt, other companies that could shape, package, label and test for quality. I do not take the evidence of Dr L.J. Squires, then the Technical Manager of DLN, that such operations could have been done elsewhere to mean any more than that. In cross-examination Dr Squires was asked whether the testing of the third party fleece was so that Gromax could satisfy itself that it was getting a decent product. His answer, with my emphasis to bring out the import of his answer was:-

"So that we could all satisfy ourselves that the product was decent".

22. Dr Squires was indicating DLNís continuing role in quality control even when the use of third party fleece had been found to be an occasional unwelcome necessity. I am quite unable to hold in relation to November 1989, before that unwelcome state had either been foreseen or come to pass, that DLN then contemplated or had permitted a state in which its connection with the origin or quality of the goods was to be so slender that its application for registration of the mark could be described as being in bad faith.

44. Gromax argues, as an element of DLNís bad faith, that it was all along intended by DLN that the "Gro-Shield" fleece would be marketed by no-one but Gromax. Whether that was so at the time of registration was, I think, not directly spoken to in the evidence but, again, later events belie it. The distribution agreement of 1990 (as also the proposals of 4th September 1989) gave exclusive distribution rights to Gromax only for a period - in the case of the Agreement, one year certain but renewable - and only for a defined area - the U.K., mainland Europe and the Middle East. The Agreement thus contemplated, at least as a possibility, a supply of "Gro-Shield" fleece to others than Gromax within that period but for use outside the defined area and its supplying even for use within that area after a year. I cannot credit that, of itself, it represents bad faith simultaneously to apply for registration of a mark and yet to contemplate granting a limited exclusive distribution agreement for the goods to which it is to be applied.

45. It is pleaded as an element of bad faith that Gromax and not DLN would be recognised by customers as the guarantor of the quality of the fleece and thus, as it would seem, that for DLN nonetheless to apply for registration represented bad faith on its part. Of course, the goods would be supplied by Gromax and complaints would be likely to be directed only to Gromax but those are the usual concomitants of an exclusive distributorship, yet that an exclusive distributorship is intended is not, of itself, in my view indicative of bad faith in the licensor who applies for registration of the intended mark. If the position had been that DLN contemplated, even in November 1989, that it would shortly abandon all control over or regulation of the quality or origin of "Gro-Shield" fleece then different considerations may well have applied but there is no evidence of any such contemplation and Dr Squiresí answer which I cited earlier is indicative of its continuing interest in quality even as to the relatively small percentage of "Gro-Shield" fleece which it did not itself manufacture.

46. Whilst at the outset DLN and Gromax saw themselves as embarking on a joint enterprise and even used the word "partnership" between themselves in a loose way, there was no agreement between them that neither would register or that DLN would not or that the mark was to be in joint ownership only. In November 1989 DLN, I find, honestly regarded itself at least a person but, more than that, as the person launching the product and as entitled properly to apply for registration of the mark. There was, in my judgment, no want of candour in its representations to the Trade Mark Office.

47. I shall not attempt to define bad faith in this context. Plainly it includes dishonesty and, as I would hold, includes also some dealings which fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined. Parliament has wisely not attempted to explain in detail what is or is not bad faith in this context; how far a dealing must so fall-short in order to amount to bad faith is a matter best left to be adjudged not by some paraphrase by the Courts (which leads to the danger of the Courts then construing not the Act but the paraphrase) but by reference to the words of the Act and upon a regard to all material surrounding circumstances. Adopting that approach, I am quite unable to find bad faith in DLNís application for registration, whether the relevant bad faith is to be as between DLN and the Registrar or DLN and Gromax or DLN and the Registrar and Gromax.

48. I next turn to Mr Haconís argument as to DLNís registration misleading the public. Section 46 (1) (d) of the 1994 Act provides:-

"(1) The registration of a Trade Mark may be revoked on any of the following grounds:

(a) -

(b) -

(c) -

(d) That in consequence of the use made of it by the proprietor or with his consent in relation to the goods or services for which it is registered, it is liable to mislead the public, particularly as to the nature, quality or geographical origin of those goods or services".

49. The designation "Gro-Shield" is what one might call a general mark, one which does not denote anything as to the quality or geographical origin of the fleece. Insofar as it signifies a function which, in relation to growth, can metaphorically be likened to a shield, it is the case of neither side that such a signification would be false. Mr Hacon thus relies on the public being liable to be misled in other ways.

50. First it is said that not all the goods sold under the mark have been manufactured by DLN. However, it is not a requirement that a mark on goods should invariably denote the manufacturer of them. It has been common enough, especially while, for example, Far Eastern labour costs have been lower than those here, for manufacturers to establish a mark in the market only later to find it is more economical or profitable for them to give up manufacture themselves but to have the goods instead made elsewhere under their control or to their specification. There is no rule, either, that the relationship between the owner of the mark and the goods, the trade connection, should remain unchanged. Here the preponderance of the fleece sold under the mark was manufactured by DLN. As for the balance - less than 15% - the bulk of it was, as I have mentioned, cut to size, packaged and labelled and tested for quality by DLN. There was even an occasion when, in relation to some third party fleece of lighter weight, DLN indicated it would not wish it to be sold under the mark. In my judgment the mark at no stage ceased to fulfil its purpose of signifying goods with which DLN, as owner of the mark, had a substantial connection in terms of their manufacture, their quality or both. In that sense the mark has not become liable to mislead the public.

51. An alternative form of a misleading of the public suggested by Gromax is that the mark has come, says Gromax, to signify goods sold by Gromax and were it now to be used for goods, even if manufactured by DLN, sold by anyone else, that would be a misleading of the public. This argument, it seems to me, proves too much; it would in very many circumstances mean that a manufacturer and owner of a general mark who had conferred exclusive distribution rights for any real duration for a product to be sold to the public would thereby jeopardise his continuing ownership of the mark; the distributor would be able to say that because of the exclusivity conferred by the distribution agreement the mark had become associated in the publicís view with goods sold by the distributor and that the mark was accordingly revocable. I cannot accept that Section 46 (1) (d) has any such a purpose or such a consequence, at least where, as here, the owner of the mark has throughout the distribution period retained a significant role as manufacturer of the preponderance of the goods and overseer or regulator of the quality of a substantial proportion of the balance of the goods to which the mark has been applied. There has, in my judgment, at all times been, as Mr Purvis argues, a close connection in the course of trade between the proprietor of the mark and the goods in relation to which it was used and that connection will continue to be the case if DLN are left free to continue to use it in relation to the fleece it produces. I do not hold the registration to be revocable under Section 46 (1) (d).

52. Another ground of revocability of a registered mark available under Section 46 (1) is:-

"(a) that within the period of 5 years following the date of completion of the registration procedure it [the mark] has not been put to genuine use in the United Kingdom, by the proprietor or with his consent, in relation to the goods or services for which it is registered and there are no proper reasons for non- use".

23. This argument can only be an alternative to the argument to misleading under Section 46 (1) (d) as, of course, that argument assumed use by the proprietor or with his consent in relation to the goods for which the mark is registered. Given that the mark has been systematically applied to packages of the fleece by DLN and has been widely advertised by Gromax during the currency of the distributorship agreement, the argument that there has been "non-use" is at first surprising but it requires concentration upon the words "in relation to the goods ......... for which it is registered". The mark is registered under Class 24. The use, though, argues Gromax, has at all times been in Class 17. Accordingly, continues Gromax, there has been no use of the mark in the relevant 5 year period "in relation to the goods ........ for which it is registered". In turn, therefore, says Gromax, the mark is revocable and should be revoked. The argument thus depends upon classification, as to which Section 34 of the Act provides:-

"(1) Goods and services shall be classified for purposes of the registration of trade marks according to a prescribed system of classification.

(2) Any question arising as to the class within which any goods or services fall shall be determined by the Registrar, whose decision shall be final."

24. Section 100 of the 1994 Act provides:-

"If in any Civil proceedings under this Act a question arises as to the use to which a registered trade mark has been put, it is for the proprietor to show what use has been made of it".

25. The evidence is that during the relevant 5 years (agreed by Counsel to expire in February 1996) the mark had been widely applied to the packaging of rolls of the fleece for use as ground crop cover both in this country and abroad and had been so applied by the proprietor of the mark, DLN. The mark has also been widely used in advertising and promotion of the fleece for such uses, both by Gromax (which use, during the currency of the distributorship agreement, could be said to have been with the consent of DLN) and, to a far lesser extent, by DLN, by way of its rôle in the drawing-up of, expenditure upon and circulation to Gromax for onward publication of those brochures displaying the mark which were used as promotional material until 1992 and by the rare references to "Gro-Shield" which DLN procured in the technical press. All that, though, says Gromax, is in relation to Class 17 use and not use within Class 24 for which class alone the mark is registered.

53. Class 17 is composed as follows:-

"Rubber, gutta-percha, gum, asbestos, mica and goods made from these materials and not included in other classes; plastics in extruded form for use in manufacture; packing, stopping and insulating materials; flexible pipes not of metal".

26. As the fleece, although plastic, was not for use in manufacture then, whether or not it is in extruded form, the only way it could fall within Class 17, were the matter only one of construction, would be as an "insulating material".

54. Class 24 reads:-

"Textiles and textile goods, not included in other classes; bed and table covers".

27. Despite its etymological root, the word "textiles" has long since included material other than woven material; for example, no-one would nowadays, surely, say that a knitted material was not a textile on the ground it was not woven. Felts and shoddy would, I apprehend, be generally regarded as textiles although not, I think, woven. But it is in my view a requirement of a textile that it is a least composed of fibres or filaments (although I would not say that everything so made - ropes, wires and strings, for example - were necessarily textiles). The fleece is composed of fibres although it is spun-bonded rather than woven. It is, in my view, in point of language, a textile and can be spoke of as textile goods.

55. The registration of "Gro-Shield", as I have mentioned, is in respect of "non-woven textile fabrics included in Class 24".

56. Each side has, at different times and upon supplying material to him, applied to the Registrar of Trade Marks for guidance or for a formal ruling. It has been argued that there has been a decision within Section 34 (2) that the appropriate class is Class 17, which decision, it is argued, is final. It has been argued that the matter is not or not primarily a matter of construction but more one of the practice of the Registrar. It is argued that the Registrar has indicated that practice to be that fabrics for agricultural purposes other than as thermal insulation fall within Class 24 whilst those for agricultural purposes for thermal insulation fall within Class 17. That has led to an argument whether or not "Gro-Shield" is for purposes "other than as thermal insulation". It also raises the question of whether the phrase "as thermal insulation" refers to actual use as thermal insulation (irrespective of the manner in which the material is promoted) or whether one is to look at intended use, gleaning such intention from the way the product is marketed. Also raised is the question whether such references as "other than as thermal insulation" refer to the chief uses of a product or to any use of the product that is above de minimis. Argument has also been raised as to whether the Registrarís rulings, if such they be, represent his view of practice only as at a particular date and whether, if that is the case, there has been no change of practice so that his ruling, whilst purporting to be of only one date, may be equally applicable to other dates.

57. As to the Registrarís practice, a number of the rivals to "Gro-Shield", fleeces made very often by exactly the same type of machines but in other ownership other than DLNís, have had their marks registered under Class 24. I am far from persuaded that this area raises questions only for the Registrar; it does not follow, as it seems to me, from the fact that the question as to the class within which goods or services "fall" is to be determined, and finally so, by the Registrar within Section 34 (2), that the question under Section 46 (1) (a) as to whether such past use as there has been has been in relation to the goods for which a mark is registered is also for him and for him alone. However, it is not in my view necessary to explore all the corners of these various arguments. Firstly, a decision of the Registrar under Section 34 (2) on the 24th October 1996, obtained on behalf of Gromax, that at the date of registration in November in 1989 "non-woven spun-bonded polypropylene in sheet or film form for use as a crop cover in agriculture or horticulture" would be classified in Class 17 was not, in my view, a decision as to whether "Gro-Shield" had or had not been used within the class for which it was registered, namely "non-woven textile fabrics included in Class 24". It was a decision made without reference to the precise nature of "Gro-Shield" (no sample had been sent to the Registrar) and with no supply to him of the advertising and other promotional material used in its marketing and no details of how it had in fact been used. This ruling, urged by Mr Hacon as the most significant one, may also be confused in that, if polypropylene is "spun-bonded", whilst it could be in sheet form, it could not be in film form. Failing that ruling, Mr Hacon next relies on the Registrarís view of the 25th March 1997, again expressed as a ruling under Section 34 (2) which concluded:-

"non-woven spun-bonded polypropylene in sheet form for use as a crop cover in agriculture or horticulture

Class 17 if not a textile or a substitute for textiles

Class 24 if a textile or substitute for textile [other than for insulation which would be Class 17]".

28. It may well be that "insulation" there is intended to refer only to thermal rather than electrical or acoustical insulation. Unless the parenthetical reference to insulation applies, "Gro-Shield" as used and promoted would, under that ruling, plainly have fallen within Class 24; it is non-woven, spun-bonded polypropylene in sheet form which has both been promoted for use and in fact used as a crop cover in agriculture or horticulture. But had it, in the relevant 5 years, been put to a genuine use in the United Kingdom by DLN or with DLNís consent other than for thermal insulation? That question led to debate on the meaning of insulation. It will be remembered that the Press Release of November 1989 spoke (as has later publicity) of the fleece protecting against sun, cold, hail, wind and damage from birds, game and harmful insects. Whilst one can speak of "protecting" crops in that way it would be an unusual, unnatural and metaphorical use to speak of fleece "insulating" against, in particular, birds, game and insects. Still less would it be appropriate to speak of such a counter measure as being "thermal" insulation. However, whilst I might have been reluctant to class the material as an insulating material or for thermal insulation when anything arguably of that kind represented only one of six of the functions which Gromaxís own promotional literature suggested for it, these doubts need not be gone into at this stage of the argument because on at least one occasion in the 5 year period, namely on or about the 29th August 1995, DLN prepared at Gromaxís behest a substantial quantity of the fleece for export to the Middle East. There is no evidence DLN did not follow its usual practice and I am content to assume that in its ordinary course DLN, in Scotland, applied the "Gro-Shield" mark to the packaging. In the Middle East "Gro-Shield" is used chiefly as a screen against insects. In addition to other evidence on the point, in the cross-examination of Mr Crame there was the following question and answer:-

"Q. As far as the Middle East is concerned, they are not terribly interested in the micro-climate feature are they? What they are interested in is an insect shield?

A. Exactly.".

29. A little later Mr Crame added, after a reference to white fly as a major problem there:-

"So if we were sending leaflets to a hot climate, we would send the insect side of things".

58. There was, therefore, within the relevant 5 years, a genuine use within the United Kingdom, by way of the application of the "Gro-Shield" labels in Scotland, by the proprietor of the mark, DLN, in relation to a textile fleece that had been promoted for and was intended for a use and in fact, no doubt, actually used outside a use as "thermal" or any other form of insulation. There was, in other words, a use within the very Class 24 for which "Gro-Shield" was registered.

59. Gromaxís argument on "non-use" accordingly fails. I am not displeased that that is so. It would encourage the worse kind of hair-splitting litigation if, despite use by a registered owner of his mark in a manner which he had no reason to think was outside the class for which he had been registered and which was similar to the uses to which rival products in the same class were put, that owner might find his mark revocable upon some minute analysis of the far from precise, clear and logical classes and their respective contents. Had it come to it, there could have been a powerful argument that even if there had been "non-use" within Section 46 (1) (a), the discretion so conferred ("the registration .... may be revoked") should not have been exercised against DLN. Alternatively it could have been held that there was a proper reason for the non-use, had there been a non-use. In the event, as there was a use that displaced Section 46 (1) (a), such further questions never arose and, as I mentioned, the "non-use" argument fails.

60. I have now dealt separately with such of the headings under which Gromax has attacked DLNís registration. None has succeeded separately and they do not succeed together. I hold DLNís registration to be neither invalid nor revocable and proper to be revoked.

Infringement of DLNís mark by Gromax

61. As I have understood the parties, it is an issue before the Scottish Courts as to whether the distribution agreement was duly brought to an end on or after the 8th July 1996. Until such an ending it may be that even DLNís letter of the 7th June 1996 and the notice of the 8th July 1996 did not amount to a due withdrawal of DLNís consent to Gromaxís use of the mark. I shall assume without deciding (as that is a matter for the Courts in Scotland) that at some stage before DLNís Counterclaim of the 5th September 1996 DLNís consent was duly withdrawn but (as I may and do decide) that thereafter Gromax continued to use the "Gro-Shield" mark in relation to fleece if not identical then at least very similar indeed to DLNís "Gro-Shield" fleece and similarly marketed, as DLNís "Gro-Shield" had been, as non-woven, spun-bonded polypropylene sheeting for use in agriculture and horticulture, As a defence to DLNís Counterclaim for infringement, Gromaxís Defence to Counterclaim asserts that Gromaxís use of the "Gro-Shield" mark has been in Class 17 and not within the Class 24 for which the mark is registered. The Defence to Counterclaim does not assert that Gromaxís use was only of its own separate mark. I do not understand Gromaxís assertion necessarily to amount to a good defence to a claim for infringement. Section 10 (1) and (2) of the 1994 Act provides:-

"(1) A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.

(2) A person infringes a registered trade mark if he uses in the course of trade a sign where because:-

(a) the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered, or

(b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered,

there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark."

30. I do not understand those provisions to require that use of a mark cannot be regarded as infringing simply because a defendant, as to his use, can claim it to fall within a different class than that for which the ownerís mark is registered, where the defendantís goods are identical to those of the registered owner and where the defendantís goods have been promoted for uses and used in ways identical to those, falling within the class in which they are registered, for which the registered ownerís goods are promoted and used. In any event I find that Gromax has used the DLN "Gro-Shield" mark within Class 24. I find that to be the case firstly by reference to the practice of the Registrar. He has put not only "Gro-Shield" but rival fleeces used as crop cover into Class 24. By using the mark in relation to fleece for a crop cover, as it has, Gromax has thus used it within Class 24. Secondly I so find as a matter of construction; even if, generously to Gromax, one could regard "Gro-Shield" as insulating material within the words "packing, stopping and insulating materials" or as thermal insulation, its use and promotion for five other functions represent uses "other than for insulation". Thirdly, lest it should be only at the principal use to which one looks, Gromax markets "Gro-Shield HC" a "non-woven crop cover for top protection against insect damage" the chief feature of which is described by Gromax as providing "long-lasting protection against white fly and other flying insects". "Gro-Shield" in my judgment is not naturally within Class 17 as it is a textile and, as it is used "other than for insulation", it is not assigned to Class 17. I hold Gromax to have infringed DLNís mark; I think it to be inevitable that there exists a likelihood of confusion on the part of the public within Section 10 (2). Gromaxís use of the identical mark suggests a trade connection with DLN which no longer exists. However, DLN have not been using the mark and the date of the due withdrawal of DLNís consent to Gromaxís use is unclear, both of which are features which may affect the nature of the relief appropriate to meet the infringement, a subject to which I shall return later.

The Validity of Gromaxís Mark

62. Notwithstanding Gromaxís anticipation of such an argument, in neither DLNís opening nor closing submissions was it argued that Gromaxís application for registration of "Groshield" and "Gro-Shield" marks in 1996 was in bad faith. Rather, DLNís attack on that registration was based on Section 47 (2) of the 1994 Act which refers back to Section 5 (1) (2) and (3). It is plainly the case that the goods in relation to which Gromax has, since July 1996, been applying its mark are identical or similar to the goods as to which DLN, by way of its earlier registration, is protected. I am not told that the sizing, gluing or packing is now materially different to the manner in which it was done by DLN and the basic sheet material is likely to be made by similar or identical machines to those used by DLN. The fleece now sold by Gromax is made, I apprehend, from similar or identical raw materials to those earlier used by DLN. The finished goods themselves are probably indistinguishable, at least to growers, from those produced by DLN. The marks themselves are at least similar if not identical. A likelihood of confusion on the part of the public,as I have mentioned, does in my judgment exist; the confusion is between goods with which DLN has a trade connection generally as manufacturer or at least as overseer of the quality and those with which it has none. Whilst I cannot be sure primarily which of the three combinations of similarity and identity dealt with in Section 5 subsections (1) and (2) is the appropriate one, I do feel able to hold that not all three can be escaped by Gromax, and that one of the three is made good, together with that confusion which two of the three require. I therefore hold that the discretion conferred by Section 47 (2) is available for exercise and I exercise it by declaring Gromaxís registration to be invalid. I do not need to deal with the case that would have arisen had DLNís mark not been valid.

Passing-off

63. The only passing-off in issue is alleged to be by DLN passing its goods off as being those of Gromax or ones associated in some way with Gromax or with Gromaxís goods. I propose first to examine this without regard to my conclusion that DLN has a valid "Gro-Shield" mark and that Gromax has not. I do so not merely to deal with the possibility that my conclusion on those points may be wrong but because the inter-action of the exclusive rights conferred on the proprietor of a registered mark by Section 9 of the 1994 Act and the law of passing-off is far from clear, given the concluding words of Section 2 (2) of that Act, namely:-

".......... but nothing in this Act affects the law relating to passing off".

31. I thus leave aside for the time being the 1994 Act and registration of DLNís "Gro-Shield" mark. Having done so, the issue, as Mr Hacon identifies it, is whether Gromax owned the goodwill in the business identified by the name "Gro-Shield" as at and after the 8th July 1996 (the date of apparent termination of the distributorship agreement of the 7th June 1990). DLN would prefer me to look to see who owned the goodwill as at the 7th June 1990, a date which, as the preference of both Counsel signifies, is likely to be more favourable to DLN and less to Gromax. I shall first look to the position as at the 8th July 1996.

64. Mr Hacon distinguishes between trade names which denote the manufacturer (for example "Dulux") and those which denote the marketer or retailer of goods (for example "St Michael"). In many cases it will be clear enough which a name is but whether it is or not, he says, one is to look at the pattern of trade, at how the name is presented to the public and to evidence from the public as to the publicís perception. It is, he says, an objective approach; the partiesí intentions as such play little part, as does their view of who is the owner of the brand. The crop cover market, he accepts, is one in which one finds both retailersí brands - for example, Marmax and Tildernet - and manufacturersí brands - for example, Agryl. Growers would know that a product could be either.

65. Mr Hacon then points to a number of features. Gromax bought fleece sold as "Gro-Shield" from manufacturers other than DLN. Against that it is to be borne in mind that the preponderance of "Gro-Shield" - some 85% or more - came from DLN, that otherís fleece was, in general, used only when for some temporary reason DLN could not supply and that even when DLN was not the manufacturer it almost always still had a rôle as shaper, packager, labeller and overseer of quality.

66. Next it is pointed out that DLN made goods to the order and specification of Gromax so far as concerned width, length, labelling and, to some extent, appearance. That was so, but the technical specification of the fleece was in DLNís hands.

67. One consignment sold as "Gro-Shield" had no connection whatsoever, says Mr Hacon, with DLN. However, the circumstances surrounding that one consignment were not explained and little weight could be given to one container load in 1991 or 1992 (Mr Crame was unsure as to the date) amongst so many others over the whole 7 year relationship between the companies.

68. Very importantly, says Mr Hacon, the packaging, sizing, labelling and quality testing of third party fleece was done by DLN only as a matter of convenience; it could have been done elsewhere at Gromaxís request. I have dealt with this point earlier. The word "only" is Mr Haconís, not the witnessís; too much is here sought to be read into the possibility of the work being done elsewhere. DLN tested third party fleece because of its own interest in there being a decent product as well as its being also in Gromaxís and the ultimate customerís interest. Moreover, whilst Gromax did occasionally conduct or arrange for tests to be conducted by others than DLN, the vast bulk of the fleece was subjected to DLNís ordinary sampling and testing which it carried out in the routine course of production, leading to a Certificate of Conformity issued by DLN.

69. All "Gro-Shield" fleece was, without exception, sold by Gromax, says Mr Hacon, but that is to say no more than that DLN fully honoured the distributorship agreement which gave Gromax exclusivity during its currency.

70. Gromax undoubtedly played a large part in seeing that the fleece was made available in widths useful to growers. It was Mr Crame who sought and found machinery capable of gluing or welding the earlier thinner strips into more convenient wider pieces and drew it to DLNís attention. It was he, too, who saw to the glue or weld being marked in red to give a distinctive look to "Gro-Shield". One might expect an exclusive distributor to feed customersí needs back to his chief supplier but here I see Gromax performing a more significant role than one might expect from a mere distributor.

71. Complaints, says Mr Hacon, were invariably sent to Gromax. That was so, but hardly surprising. It was Gromax alone that met and dealt with customers and the customersí identity was generally not known to DLN nor DLNís to the customer. In a situation where there is an exclusive distributorship agreed between parties one might reasonably expect customersí complaints to go to that distributor but it is plain that if Gromax did receive complaints from customers Mr Crame would, where appropriate, pass them on to DLN as he did in the case of the UAE complaints.

72. So far as concerns presentation of the fleece to the public, the name itself carries neither side very far; Gromax had its developing range of "Gro-" products; DLN a stable of "-Shield" products. Mr Hacon argues that the name was first put before the public without any reference to DLN. In the sense that as the retailer he first used the name in communication with the public and did so without asking DLN for its leave and without its immediate knowledge, that is so. However by then, the 23rd October 1989, there had been discussions between Mr Crame, DLN and DLNís agents leading to agreement on the name for the fleece which it was then in both partiesí interests should be marketed. That Gromax began marketing without the express permission or knowledge of DLN is not a factor I see as having any real weight. By the time brochures were prepared, with a substantial subsidy at DLNís expense, DLNís rôle as manufacturer and as part of Shell was brought out; the fact that Gromaxís address and telephone number was given but not DLNís was no more than to say that even then it was in both sides minds that Gromax was to be the distributor. Far stronger in Gromaxís favour is the paucity of advertising featuring DLN; such little there was was directed only to the technical non-woven and textile Press rather than to growers. Yet Gromax has very frequently promoted the "Gro-Shield" name in the horticultural Press and at exhibitions, promoting it as part of its "Gro-" range.

73. The evidence of the 10 growers who were called showed a clear association in their minds between "Gro-Shield" and Gromax in recent times. When they were asked to deal with a hypothetical position that would arise had they encountered someone other than Gromax selling "Gro-Shield" their answers were, not unnaturally, less clear, but, even so, there was no clear view that such a case would have represented to them the manufacturer, someone other than Gromax, having the goodwill of the business associated with the "Gro-Shield" name but electing to sell through persons other than Gromax. The evidence of the growers is a persuasive factor in favour of Gromax being identified, by the 8th July 1996, as the trade origin of goods marked "Gro-Shield".

74. However, against these arguments of Gromax (and still leaving aside DLNís arguments based on its registration of the mark) DLN puts great reliance on the distributorship agreement of the 7th June 1990. Gromax thereupon became exclusive distributor of a product described in a way that showed its association with DLN, namely "Daltex Gro-Shield". That Gromax were to promote the product was apparent from the fact that DLN was to offer Gromax promotional support. Mr Purvis relies on a passage in Wadlowís "The Law of Passing Off" 2nd Edition 1995 where at para 2.62 one finds:-

"If a valid licence of a name or mark is in operation then the goodwill in respect of the business so carried on accrues to the licensor rather than the licensee ........... the licensee acquires no interest in the name or mark, and must cease using it on termination of the licence ........... Provided the licence is valid, it does not matter that the licensee may be held out as the provider of the goods in question and may in fact be primarily responsible for their character or quality".

32. Whilst I recognise that the Courts would not wish to undermine the utility of distributorship agreements (and exclusive distributorship agreements would be the most vulnerable) I am loth in this area, which is to some extent one of fact and degree, to endorse a proposition which is, as framed, so inflexible, so free of regard to the terms of the particular licence, to the state of affairs when the licence was made and to whether the licensee has, for example, promoted the name in ways beyond such as may have been incidental to his obligations under the agreement or beyond preservation or enhancement of such interests as he acquires under the agreement. I would, however, be content for present purposes with a proposition which stated that subject to special circumstances being proved to the contrary and to the terms of the particular licence, as between licensor and licensee as competitors for the ownership of the goodwill at the termination of a licence, the position of the licensor should not be taken to be weakened nor that of the licensee enhanced by such activity on the licenseeís part or such his contractual position during the currency of the licence as was respectively either required of him or conferred upon him by the licence or, as to activity of his known to the licensor, was such as could be fairly regarded by the licensor as no more than reasonably incidental to the maintenance or promotion of such commercial interest in the name as the licence had conferred upon the licensee. I do not pretend that my formulation covers the whole range covered in the citation from Wadlow supra but I shall adopt it, so far as it goes, for the purposes of this case. If the proposition is correct then plainly factors such that Gromax alone sold "Gro-Shield", that Gromax was interested in and took steps related to the quality of the product, its promotion of the fleece to growers and the reputation gained by Gromax during the currency of the agreement as being closely connected with and responsible for "Gro-Shield" all have little or no weight against DLN. Gromax, having had the benefit of the distributorship agreement, must now bear that as its burden. In this way, although one begins to look at the position as at the 8th July 1996, one is almost immediately thrown back to the state of things as at the 7th June 1990 when the distributorship agreement was made. Even so I bear in mind Gromaxís rôle in helping to find the machinery for and procuring the gluing, welding and marking of the fleece in ways that made it suitable for customersí needs and distinctive in the market. It was, of course, in its interest that it did so but in my view Gromax was there going beyond that range of activity which a manufacturer could regard as being no more than such as was to be expected of a mere short-term distributor, even an exclusive one.

75. Reverting, as I therefore have to, to the 7th June 1990, I find different factors pointing in different directions. I notice that "Gro-Shield" had then been used as a name for less than 8 months and for only one growing season, between February and May 1990. The name had been agreed between the two sides and both had promoted it; Gromax by contact with growers, by the early advertisements and, perhaps, by leaflets and DLN by its part in the drafting of, by featuring on and contributing substantially towards the cost of the brochures which promoted the product as made by it as an arm of Shell. Whilst, over a time, the Gromax team gained a reputation amongst growers as knowledgeable and helpful in their advice as to use of plastics in horticulture such as to lead to a perceived connection between "Groshield" and no-one but Gromax, I have no evidence that such was at all widely seen to be the case in the very earliest days. Although the technical specification of the fleece was DLNís yet it was Mr Crame who pushed to ensure that the product was made in a way that suited growersí needs. It cannot be said that Gromax alone was in fact looking to quality; DLN was checking and sampling during the production runs. So far as concerns public perception of who was responsible for the character and quality of the goods (I have in mind Wadlowís helpful summary at para 2.53 p. 103 supra) I have no evidence of what that perception was at June 1990 but would surmise, given the promotion of the fleece as having a British manufacturer and a connection with Shell, that no-one would then have thought that such matters were exclusively the province of Gromax, then a small undertaking incorporated only 9 months earlier and hardly likely to have been regarded as the owner or operator of the most modern equipment to which Gromaxís early literature drew attention. As to whether, at the time, the "Gro-Shield" fleece was bought on the strength of an identifiable trader, Gromax was then an infant company and whilst Mr Crame brought to it experience gained with other employers, he was prudently content to point, as DLN were content that he should, to DLN and its connection with Shell. I have to have in mind, too, that Mr Crame proposed the name and that no "Gro-Shield" was sold, even then, other than through Gromax and to its order. In some cases it was not manufactured but only cut, glued, packaged and labelled by DLN.

76. Against this background of factors pointing in different directions, Mr Purvis draws my attention to Robinson -v- Finlay (1878) 9 Ch p. 487 C.A., a case in which, without their having formalised their arrangements, three parties were concerned in the export, carriage and sale of goods which bore a brand that included elements representing two of them, a brand that had been agreed to be used in that particular trade by all three or at least by two of the three. In the Court of Appeal an argument that impressed the Court involved consideration of what the case would have been had, say, one of the three retired or died or given up the business after the brand had been used consensually by all three for many years. It was plain the mark could in such a case still be used by those continuing the trade - per James L.J. at p. 498; per Bramwell L.J. at p. 502. I find it difficult to suppose that if DLN had decided to give up the manufacture of the fleece or else to leave the horticultural market for it that, in passing-off terms only, they could have stopped Gromax continuing to use "Gro-Shield" mark. Equally, say, if Gromax had decided to sell only some other type of crop cover I cannot see it as being able to restrain DLN continuing to brand its fleece with the mark.

77. I have not found any one factor as determinative but having regard as best I can to all of them I do not see the goodwill as at the 7th June 1990 as belonging wholly to either side; rather I hold that as at that date the goodwill and the business associated with the "Gro-Shield" name was vested in DLN and Gromax jointly. Moreover, adopting the proposition I have mentioned as to the effect of the distributorship agreement, the same was in my judgment the case as at the 8th July 1996 and at the date of Gromaxís proceedings. In each case I have left aside the consequences upon passing-off of the valid registration by DLN of the "Gro-Shield" mark. By the last of the dates mentioned, ownership would, if anything, have moved in Gromaxís favour but would still, in my judgment, have been joint. That being the case, I am led, corresponding to the view taken by the Court of Appeal in Robinson -v- Finlay supra, to a conclusion that Gromax has not discharged the onus falling upon it as plaintiff in its passing-off claim of proving itself to have the monopoly and sole right to the use of the mark. Gromaxís plea that the goodwill in the "Gro-Shield" name is vested in Gromax alone was denied by DLN in its defence and that denial, leaving aside the effect of DLNís registration, in my judgment succeeds.

78. As to the effect of DLNís registration on the position as to passing-off, if, notwithstanding Section 2 (2), DLN as proprietor of the registered mark "Gro-Shield" has and can assert in passing-off the rights conferred by Sections 9 and 10 of the 1994 Act that could only strengthen its position against Gromax. If Gromax fails, as I have held it has, irrespective of DLNís registration, it could only fail equally or more heavily were the registration by DLN and (as I have held) the invalidity of Gromaxís own registration to be taken into account. In that circumstance I leave decision on Mr Haconís argument under Section 2 (2) that DLNís (valid) registration affords it no defence to passing-off to some future case where such a point needs to be decided, though I cannot resist the thought that an implication into the latter part of Section 2 (2) of words such as "save where the context otherwise requires" may not be impossible. Similarly, I leave aside Mr Purvisís argument that, even if, other considerations apart, the common law effect of a licence to use a name was less favourable to DLN than the passage in Wadlow supra suggested, then in any case the Trade Marks Directive of 21st December 1988 Article 10 (3), to the effect that the use by the licensee is deemed to constitute use by the proprietor, although not introduced into our law, leads to the same conclusion as that arrived at in Wadlow, as also did Section 28 (2) of the Trade Marks Act 1938.

79. In the event, other permutations of the questions I posed at the outset as to passing-off need not be answered.

Relief

80. As to relief, other than as to costs, as to which I shall hear the parties, in Gromaxís claim in 1996 G. No. 6914 I grant no injunction nor any other relief but in the Counterclaim by DLN in that action an injunction to restrain Gromax from infringing DLNís registered mark is appropriate, at all events unless my view that the goodwill in passing-off terms is jointly owned would be sufficient to make one inappropriate, as to which I have not been addressed. There is, though, no provision in the 1994 Act dealing with a reverse of the position dealt with in the concluding words of Section 2 (2). There is, in other words, nothing in the Act which says that the law of passing-off shall affect the rights conferred by the Act. However, the parties have sensibly awaited judgment on the principal points I have been dealing with before turning in any detail to questions of relief. I have thus heard nothing as to that and nothing, either, as to whether some interval should be given to Gromax before any injunction comes into force so that it could, without its fleece business being brought to its knees, make fresh and prompt arrangements for new labelling, new publicity and so on. That is a matter for the parties first to discuss between themselves but for me to rule upon, after hearing the parties, if nothing practical can be agreed, as also is the case with the other relief prayed for in DLNís counterclaim, namely delivery up and an inquiry as to damages. As I earlier mentioned, it could be that doubts as to just when Gromaxís licence under the distributorship agreement duly ended may also affect questions as to what relief is appropriate.

81. In Gromaxís Originating Motion 1996 G No. 4121 I shall make no order, costs apart.

82. In DLNís Originating Motion 1996 G No. 1484, costs apart, I declare that Gromaxís mark is and was invalid and is revoked.

83. Accordingly, I shall, after such interval as is desirable for the discussion as to relief which I have mentioned, hear the parties as to the detailed relief appropriate in DLNís Counterclaim and I shall, of course, also hear the parties on costs.


© 1998 Crown Copyright


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