Case: Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851
Outcome: cited
precise definition of the elements of the tort of passing off remains elusive: ConAgra Inc v McCain Foods (Aust) Pty Ltd [1992] FCA 159 ; (1992) 33 FCR 302 at 355 per Gummow J; Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259 ; (1993) 26 IPR 261 at 268 per Gummow, French and Hill JJ. For present purposes, however, it may be accepted that the elements of the modern law of passing off were summarised in Erven Warnink BV v J Townend &amp; Sons (Hull) Ltd [1979] AC 731 at 742 by Diplock LJ as follows: My Lords, A. G. Spalding &amp; Bros. v. A. W. Gamage Ltd., 84 L.J.Ch. 449 and the later cases make it possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or 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 a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so. His Lordship continued: In seeking to formulate general propositions of English law, however, one must be particularly careful to beware of the logical fallacy of the undistributed middle. It does not follow that because all passing off actions can be shown to present these characteristics, all factual situations which present these characteristics give rise to a cause of action for passing off. True it is that their presence indicates what a moral code would censure as dishonest trading, based as it is upon deception of customers and consumers of a trader's wares but in an economic system which has relied on competition to keep down prices and to improve products there may be practical reasons why it should have been the policy of the common law not to run the risk of hampering competition by providing civil remedies to every one competing in the market who has suffered damage to his business or goodwill in consequence of inaccurate statements of whatever kind that may be made by rival traders about their own wares. The market in which the action for passing off originated was no place for the mealy mouthed; advertisements are not on affidavit; exaggerated claims by a trader about the quality of his wares, assertions that they are better than those of his rivals even though he knows this to be untrue, have been permitted by the common law as venial "puffing" which gives no cause of action to a competitor even though he can show that he has suffered actual damage in his business as a result. Lord Fraser of Tullybelton expressed perhaps a narrower statement of the cause of action: [1979] AC at 755 to 756. Lord Diplock's statement as to the five " characteristics " of the cause of action for passing off has been adopted in Australia: Moorgate Tobacco (1984) 156 CLR at 443 to 444 per Deane J; ConAgra (1972) 33 FCR at 308 to 309 per Lockhart J; Osgaig [2004] FCA 1394 at [83] to [85], 213 ALR at 167 to 168 per Weinberg J; Ward Group Pty Ltd v Brodie &amp; Stone plc [2005] FCA 471 at [29] to [30] [2005] FCA 471 ; , 143 FCR 479 at 487 per Merkel J. The " declarations of principle " of Diplock and Fraser LLJ were also accepted by the Privy Council on appeal from the Supreme Court of New South Wales in Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851 at 856 as being of " general application ".