Passing Off in the 21st Century - Character Merchandising and Image Rights

To many, Eddie Irvine is known as the small-town boy who made it to Formula 1, driving for Ferrari. More recently, he has made headlines for being sentenced to six months in prison following a bar brawl in Italy. That was, however, not his first court appearance. In 2002, Irvine successfully brought a passing off claim against British radio station Talksport; the decision was subsequently upheld by the Court of Appeal in 2003.

As discussed in my previous article, passing off can be a valuable tool in preventing others from unfairly benefiting from the goodwill and reputation that an individual or business has built. Talksport's use of the photograph created the impression that Irvine endorsed the station, potentially affecting the value of his future endorsement opportunities. The case was significant because it demonstrated that passing off could protect the commercial value attached to a real person's identity and reputation.

In the past, the courts struggled with the requirement for a common field of activity, causing many passing-off claims to fail. Because passing off is based on common law, rather than a single piece of legislation, its rules have developed gradually through individual cases. As the commercial value of celebrity and character merchandising has become more widely recognised, the courts have increasingly adapted the law to reflect these changes.

The Common-Field Conundrum

The difficulties surrounding the common-field requirement began as long ago as 1947. In McCulloch v Lewis A May [1947] 2 All ER 845, the defendant sold ‘Uncle Mac’s Puffed Wheat’, using the name of a popular children's radio broadcaster known as Uncle Mac. The cereal was also designed to associate it with the celebrity. Despite this, the court found in favour of the defendant. At the time, the court was unwilling to accept that the public would expect celebrities to earn money from merchandising. As Uncle Mac was a radio presenter rather than a cereal manufacturer, there was no common field of activity and therefore no passing off.

This approach was subsequently confirmed in Lyngstad v Anabas [1977] F.S.R. 62 . Here, the claimants attempted to prevent the sale of T-shirts bearing images of pop group, ABBA. The action, once again, failed on the common field issue. This was despite ABBA having its own official line of merchandise. The group’s activities were still supposedly too far removed.

Perhaps most ironic example was the decision in Tavener Rutledge Ltd v Trexapalm Ltd. [1975] F.S.R. 479. Not only was the defendant allowed to produce lollipops based on a television detective, Kojak, they were also able to successfully prevent a licensed manufacture from producing a similar product.

The Declining Relevance of Common-Field

As other jurisdictions, such as Australia, started to realise the true potential of character merchandising and the accompanying commercial gain, the UK courts caught up.

True recognition of the utility of passing off in such claims came through the decision in Mirage Studios v Counter Feat Clothing Co. [1991] F.S.R. 145. This case involved the production of clothing bearing images of the Teenage Mutant Ninja Turtles. Mirage Studios made significant profit from the sale of merchandise, so it was unsurprising that the court held that they also held goodwill in the clothing trade. The unauthorised sale of the clothing could mislead consumers into believing that the products were connected with or authorised by Mirage, satisfying the requirements of passing off.

This represented a significant shift from the earlier cases. The courts are increasingly willing to recognise that a strong reputation can create an expectation of commercial association, even where the claimant and defendant operate in different fields.

For example, the Danish toy manufacturer Lego successfully prevented a plastic irrigation manufacturer from using the name ‘Lego’. The court recognised the strength of the Lego name and the likelihood that consumers would assume a connection between the two businesses. Similarly, in Hogan v Pacific Dunlop Ltd, Paul Hogan, successfully challenged an advertisement that deliberately imitated his character. Although the advertisement did not necessarily damage Hogan's existing career, the court recognised that it could interfere with his potential commercial and marketing opportunities.

These cases suggest that the common field of activity has become less of a strict requirement.

When the Character Isn’t Fictional

The Irvine case demonstrated the flexibility of the passing-off principle. This flexibility was demonstrated by the application of passing off to what is commonly described as false endorsement. Talksport had used a photograph of Irvine in an advertisement and superimposed a Talksport radio over the mobile phone that he was originally holding. Irvine argued that, together with the Talksport logo and slogan, the advertisement created the impression that he was associated with or endorsed the radio station.

The court accepted that Irvine had goodwill in his reputation as a Formula 1 driver and that the advertisement amounted to a misrepresentation. Irvine had sought £50,000 in damages, but was ultimately awarded £25,000. Rather than calculating the award according to actual financial loss, the court assessed what would have been a reasonable fee for Irvine's endorsement. This reflected the commercial value of his reputation and the fact that he regularly earned money from endorsement deals. 

Overall, the development of the law on character merchandising and image rights appears to have turned 180 degrees. Today, the courts are much more willing to recognise the commercial value of characters and personal identities.