Facts
Prior to 1998 the Claimant, an American company which was
formerly known as Jetfax Inc until it changed its name to efax.com
in February 1999, carried on business as a supplier of computer
hardware. In February 1998 the company launched a new service
on the internet converting fax messages to e-mail messages.
This was a free service and involved the subscribers, who logged on
at www.efax.com, being allocated a US telephone number for use as
their fax number. Faxes sent to that number would be
automatically converted into digital form and forwarded to the
subscriber’s e-mail address. In November 1999 the Claimant
relaunched its efax service in the UK using UK telephone
numbers.
Since January 1998 the Defendant’s business had offered services
which included a fax to e-mail service similar to that offered by
the claimant. In February 1998 the Defendant had acquired and
registered the name efax.co.uk on the internet. The service
was not made available to the general public, however, until August
1999 when the service became automated and available on the
internet. The Defendant charged for the service.
In February 1999 the Claimant’s European operations manager had
discovered that the name efax.co.uk was already taken up. He
therefore contacted the Defendant on a number of occasions and
offered to purchase the domain name; these offers were
refused. In November 1999 an action was commenced for passing
off. The Claimant applied for interim injunctive relief
restraining the Defendant from passing off his services as and for
those of the Claimant by the use of the name “efax”. The
Defendant cross-applied for the claim to be struck out on the
grounds that it was bound to fail or, in the alternative, for
summary judgment in his favour.
The Claimant contended that it had established a substantial
reputation and goodwill in the UK, based on the fact it had
approximately 17,000 UK subscribers of whom 5,000 had used the
service. Further the Claimant argued that the word “efax” was
a good trade mark as it carried connotations of fax and the
internet but yet it was not part of the English language.
The Defendant argued that the name “efax” was descriptive of the
service offered and therefore the Claimant had no real prospect of
establishing an exclusive goodwill in the mark. In addition
the Defendant claimed that the Claimant had not built up a
reputation in that mark in the UK by November 1999 and, that the
risk of confusion was likely to be very small given the different
names of the businesses and the fact that one service was free.
Judgment
Parker J identified the three elements of a claim in passing off
as being (a) a reputation acquired by the claimant in his goods,
name, mark, etc. (b) a misrepresentation by the defendant leading
to confusion, which (c) in turn causes damage to the Claimant.
On the evidence Parker J considered there to be considerable
force in the submission that the word “efax” was essentially
descriptive in its nature and that it was already used widely on
the internet to denote a unified messaging service combining fax
with e-mail. An “e-language” was rapidly growing which, in
the judge’s opinion, was likely to render Lord Herschell’s concept
of “the common stock of the language” (Reddaway v Banham [1896] AC
199) more and more difficult to apply. The relevant language
for the purposes of passing off was that which is in common use in
the relevant market, being, in this case, the internet.
As a result, the judge concluded that on the evidence the
Claimant might well have a difficult task at trial establishing a
distinctive goodwill in the word “efax” sufficient to support a
case of passing off, however that did not lead to the conclusion
that the claim was bound to fail, or that there was no serious
issue to be tried.
Applying the principles of American Cyanimid Parker J
found that damages were not an adequate remedy for either party and
that in assessing the balance of conveniences it was necessary to
assess the extent to which confusion was likely to arise if no
interim injunction were granted and the Defendant continued to
offer his service under the name “efax”. The judge considered
that any confusion caused by the similarly named services was as a
result of the descriptive and generic nature of the word “efax” and
not due to any misrepresentation by the Defendant that he was
carrying on the Claimant’s business. Parker J concluded that
because the two web sites were different in appearance and one
service was free, the risk of actionable confusion was small, as
was the risk of the Claimant suffering significant recoverable
damage.
Commentary
This case is mainly of interest because it involved the
application of familiar principles in the law of passing off to
relatively novel facts arising out of the world of e-commerce.
It is trite law that, in order to succeed in a claim for passing
off, the claimant must establish that he has a reputation for his
goods or services under a name, mark or other trade indication such
that the indication in question is recognised by the public as
distinctive of those goods or services. If the name in which
the claimant claims a reputation is prima facie descriptive, then
the claimant will not surmount this hurdle unless he can
demonstrate that it has acquired a secondary meaning as denoting
his goods or services; if the name is generic (that is to say, it
is the name of the goods or services in question) the claimant will
not be able to overcome this hurdle at all.
In the present case the claimant claimed a reputation in the
term “efax” for its fax to email services. The defendant said
that this term was not distinctive of the claimant’s service since
it was at least descriptive of, if not general for, fax to email
services. The claimant replied that the term could not be
descriptive, let alone generic, since it was not in any
dictionary. In order to be descriptive, the claimant argued,
the term had to be part of the “common stock of language”.
As Jonathan Parker J held, however, the relevant “stock of
language” for the purposes of passing off is that which is in
common use in the relevant market. The market in question was
the Internet. The explosive growth of the Internet has
generated a new “e-language” which for the moment has left
dictionaries lagging behind (although no doubt they will soon catch
up). As a result the prefix “e” is now widely recognised as
describing internet-based equivalents to non-internet-based
services. Thus many people would understand the term “efax”
to mean an internet-based fax-related service even if they had not
seen it before and even they did not appreciate that it referred to
a fax to email service. In addition, there was evidence
before the Court of generic usage of the term “efax” to denote fax
to email services.
The judge therefore concluded that the claimant would have
difficulty in establishing that the term “efax” meant that there
was little likelihood of confusion pending trial and hence little
risk of the claimant suffering irreparable harm.
It may be anticipated that the courts would react in a similar
manner to other attempts to monopolise recently established but
commonly used terms of e-commerce.
