Hotel Cipriani Srl -v- Cipriani (Grosvenor Street) Limited  RPC 16 -foreign business and English goodwill in passing off claims
What is passing off?
Passing off is a common law tort or civil wrong. It is based on the premise that, as Lord Halsbury put in Reddaway and Frank Reddaway & Co Ltd v Banham and George Banham & Co (1896):
“nobody has any right to represent his goods as the goods of somebody else”.
In order to succeed in an action for passing off the claimant must satisfy a three part test (see Reckitt & Colman Products Ltd v Borden Inc  RPC 341). That test is this
1. goodwill attached to the name;
2. a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that the goods or services offered by it are the goods or services of the claimant; and
3. damage to the claimant, by reason of the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the claimant.
This article concerns goodwill. In particular whether a foreign company can acquire/create English goodwill and use the same in an action for passing off. Goodwill is as Lord Macnaghten in the case of IRC -v- Muller & Co’s Margarine (1901) said:
“a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates.”
It should be noted that the goodwill is not the same as reputation in the trade mark sense. Harrods -v- Harrodian School (1996), Millett LJ said this:
“Damage to goodwill is not confined to loss of custom, but damage to reputation without damage to goodwill is not sufficient to support an action for passing off.”
The facts of the case
Signor Giuseppe Cipriani, in1958 founded Hotel Cipriani on the Island of Guidecca (Venice). Guiseppe senior was the proprietor of Harry’s Bar in Venice together with a hotel on the island of Torcello under the name, Locanda Cipriani. He also owned Hotel Villa Cipriani.
By 2004 the businesses split up. Orient Express Group and the Villa Cipriani and another hotel owned the Hotel Cipriani. Certain members of the Cipriani family were still owners of Harry’s Bar and the Locanda Cipriani.
Owners of Harry’s Bar later opened up a restaurant under the name Cipriani London this is despite the defendant’s side of the Cipriani family opening up and running various restaurants under and by reference to the name Cipriani in New York.
The action in the High Court
Arnold J in summary said that the issue of foreign goodwill was not so much about whether an undertaking had a business in the UK but rather whether there was a presence or as the case may be absence of customers. This would follow the leading case on the description of goodwill IRC -v- Muller & Co’s Margarine. This also followed Sheraton Corp -v- Sheraton Motels (1964) in which it was in essence held that Sheraton (a foreign chain of hotel) has goodwill (in the passing off sense) in the UK provided the bookings were made from the UK.
The action in the Court of Appeal
The Hotel Cipriani was world famous and had many British customers I think a figure of 30% of its rooms were booked by the Brits. On the other hand the New York restaurants whilst seeming know via the British media could not boast a similar customer base with small bookings coming in from the Brits. In light of this the Court of Appeal found that that Hotel Cipriani had goodwill in the UK. Harry’s Bar did not.
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