IPEC upholds passing off claim in anti-aging skincare product case

6th July 2023

• Skincare company YNNY brought claims against an ex-supplier for passing off and copyright infringement, as well as malicious falsehood and causing loss by unlawful means
• YNNY established the requirements to succeed in a passing-off claim, and the copyright infringement claim was upheld in part
• YNNY’s other claims failed

On 20 April 2023 the Intellectual Property Enterprise Court (IPEC) handed down its decision in Yours Naturally Naturally Yours Limited v Kate McIver Skin Limited ([2023] EWHC 890).

Background

Georgina Tang, the founder, director and shareholder of Yours Naturally, Naturally Yours Ltd (YNNY), formulated the anti-aging serum ‘Elixir’ (‘the product’), which she brought to the market in 2015. In 2017 Kate McIver purchased the product and later entered into negotiations with Ms Tang to resell it under her own label. YNNY supplied Ms McIver with a small batch of the product, which she sold under YNNY branding.

In March 2018 negotiations to sell the product under alternative branding restarted, and Ms McIver began to market the product with ‘Kate McIver’ branding. During this time, Ms McIver made a number of claims on social media about the development of the product, stating that she had “literally put [her] life and soul it too [sic] researching and training, creating bespoke treatment and tailor making the ingredients”. She also incorporated Kate McIver Skin Limited (KMSL), which took control of the business, engaged a third-party manufacturer to reformulate the product and renamed it ‘New Secret Weapon Serum’.

Ms Tang brought proceedings against Ms McIver and KMSL for:

• passing off;
• malicious falsehood;
• causing loss by unlawful means; and
• copyright infringement.

Decision

Hacon J in the IPEC upheld the claim for passing off in relation to the product, but dismissed the claims for malicious falsehood and for causing loss by unlawful means. He partially upheld the copyright infringement claim.

Passing off

Hacon J applied the classic trinity test for passing off as first set out in Reckitt and Colman Products Limited v Borden Inc ([1990]1WLR), namely (1) goodwill, (2) misrepresentation, and (3) damage.

Goodwill

The judge found that Ms Tang had established goodwill in the period between June 2015 and June 2018.

Misrepresentation

Ms McIver’s statement in June 2018 that she had put her life and soul into researching and creating the ‘Kate McIver’ serum can have been taken only as meaning that she had created the Elixir serum she was selling. By implication, this statement also suggested that she was the creator of the Elixir serum sold by anyone else, including YNNY. Such express and implied misrepresentations (which were repeated in various formats including on social media, in print and on radio) were false.

Damage

YNNY claimed two heads of damage: loss of sales and damage to reputation.

• Hacon J did not find damages by loss of sales to be proven on the evidence. It was possible that Ms McIver’s sales could have caused the opposite in that the sale of Elixir and Secret Weapon serum expanded the overall market which, in turn, may have increased demand for YNNY’s product.
• The judge did find damage to YNNY’s reputation and loss of the distinctiveness of the Elixir brand name. For example, there was evidence of at least one customer finding that KMSL’s first reformulation caused a skin breakout.

Consequently, YNNY met the requirements to establish a claim in passing off.

Malicious falsehood and loss by unlawful means

When assessing YNNY’s claim of malicious falsehood, the judge placed weight on the implication of Ms McIver’s statement being that Ms Tang was not the creator of the product, finding that the relevant section of the public would have understood the words to have such a meaning. While Ms McIver was unable to give evidence as to her belief of her statement (as she had died in March 2019), given the historic interactions between the parties, the judge was not in doubt that she knew that it was false.

However, the claim for malicious falsehood ultimately failed because the false statement did not cause YNNY any pecuniary loss. Hacon J relied on his findings in relation to passing off (discussed above) to support this.

YNNY’s claim for loss by unlawful means also failed, as the judge was not satisfied that Ms McIver had the requisite intention to
cause loss.

Copyright infringement

Finally, Ms Tang brought a claim in copyright for the use of certain marketing materials that were supplied to Ms McIver in 2018. Hacon J found that Ms Tang had granted Ms McIver a bare licence to use the marketing materials to promote the product. However, this licence came to an end in November 2018 when Ms McIver removed Ms Tang’s branding from the labels and marketed the product under the ‘Secret Weapon’ brand.

Consequently, the claim for copyright infringement succeeded, but only from when the licence ended on 30 November 2018: any use thereafter was infringing use.

Comment

This decision is interesting as it is a successful pure passing-off case, when often a ruling on passing off follows a finding of trademark infringement under Section 10(3) of the Trademarks Act 1994 – although the facts are unusual. It also illustrates how claims in passing off can succeed in cases where products have been relabelled or reformulated. Another point to note is the judge’s analysis of the copyright claim – although he concluded that the defendant did have a bare licence initially, this ended when she made alterations to the product and consequently moved from being a licensee to an infringer.

As claims for malicious falsehood and causing loss by unlawful means are notoriously difficult to get home, it is unsurprising that YNNY failed on these claims.

The defendants are seeking leave from the Court of Appeal to appeal the IPEC’s decision.

This article first appeared in WTR Daily, part of World Trademark Review, in June 2023. For further information, please go to www.worldtrademarkreview.com