274
[No. 10]
14th August, 1969
[1969] R.P.C.
IN THE HIGH COURT OF JUSTICE-CHANCERY DIVISION
Before MR. JUSTICE CRoss
13th and 20th January, and 12th February, 1969.
STERLING-WINTHRO'P GROUP LTD.
5
v.
FARBENFABRIKEN BAYER A.G. AND ANOTHER
Trade mark-Passing ofJ-·BAYER-Discovery of documents-Documents relating
to trading methods of the plaintiffs and their parent company-Trading methods of
parent company through other subsidiaries irrelevant-Documents relating to
previous trade mark application relevant and discovery ordered.
In a passing off action the plaintiffs contended that the use of the mark, known as
10 the Bayer Cross, by the defendants was an infringement of their trade mark, and
the defendants counterclaimed for removal of the plaintiffs' mark and alleged that
the use of the word BAYER by the plaintiffs in connection with the sale of goods not
manufactured by the first defendants was deceptive and that the fraudulent course
of trading pursued by the plaintiffs' American principal company acting through
15 its subsidiaries in the U.K. and elsewhere disentitled the plaintiffs to relief. The
defence included particulars of intentional deception and fraud and the defendants
attempted to show by reference to the methods of advertisement adopted by the
plaintiffs outside the U.K. and the trading policy of an Australian subsidiary of the
American principal company that the plaintiffs' course of trading was part of a
20 systematic policy of deception pursued in the U.K. and elsewhere by the plaintiffs
and other subsidiaries of the American company.
The defendants by this summons sought discovery of documents in the plaintiffs'
possession which referred to the trading methods pursued by the American principal
company through its subsidiaries, other than the plaintiffs, outside the U.K. and
25 Ireland relating to their use of the Bayer Cross, the word BAYER and phrases incorporating that word, and the attempts of the principal company to capture the
markets of the German Bayer company. The defendants also sought the discovery
of documents relating to the plaintiffs' application to register the word A VERTIN as
a trade mark which was dismissed in 1941 on the ground inter alia that the mark
30 had been used to describe a drug made by the German Bayer company and its
use on goods not so made would be deceptive. The plaintiffs agreed to disclose all
documents referring to their own methods of trading in the United Kingdom but
they refused to disclose the documents concerned with the AVERTIN decision or
those which related to the trading of their American principals or its other sub-
275
Cross, J.
Sterling-\Vinthrop Group Ltd. v.
Farbenfabriken Bayer A.G.
[1969] R.P.C.
sidiaries. The plaintiffs in their turn requested the defendants to disclose how and
when they had acquired the plainiiijs' internal memoranda, notes of meetings,
advertisements, brochures and copies of correspondence with the public about their
use of the word BAYER.
Held, (1) that the defendants were not entitled to claim discovery of documents 5
relating to the trading methods pursued by the American parent company through
its subsidiaries other than the plaintiff outside the U.K., as such documents would
not assist in determining whether the plaintiffs' actions were justified.
(2) That the plaintiffs should, however, disclose documents relating to their 10
methods of advertisement in foreign countries as specified in the particulars of the
defence.
(3) That the documents relating to the AVERTIN case which. showed the reaction
of the plaintiffs and their American principals to the decision were highly relevant
and discovery should extend to all such documents.
15
(4) That the defendants' offer to make written admissions as to the dates when
the various documents belonging to the plaintiffs came into their possession was
reasonable and the plaintiffs were not entitled to insist on knowing how such documents came into the defendants' possession.
This was a procedure summons relating to discovery brought by Sterling-Win- 20
throp Group Limited, the plaintiffs in a passing off action against Farbenfabriken
Bayer A.G. and F.B.A. Pharmaceuticals Limited relating to the use of the Bayer
Cross and the word BAYER. The history of the action is reported in [1966] R.P.C.
477, and the facts relevant to the summons appear from the following judgment.
H. H. V. Forbes, Q.C., Max Mosley and D. G. Robins, instructed by Faithful!, 25
Owen & Fraser, appeared for the applicants on summons (defendants). Anthony
Walton and C. H. Owen, instructed by McKenna & Co., appeared for the respondents (plaintiffs).
Judgment was reserved and was delivered on 12th February 1969.
Cross, J.-This procedure summons relates to discovery in an action in which the 30
plaintiffs are Sterling-Winthrop Group Limited, and the defendants Farbenfabriken
Bayer Aktiengesellschaft and F.B.A. Pharmaceuticals Limited. In 1966 I heard a
motion in the action, and my judgment on it, which is reported in [1966] R.P.C.
477, sets out the events (spread over many years) which led up to this action.T do
not propose to repeat all this again, for I assume that anyone who is interested in 35
this judgment win have read or will read the earlier one. It is enough to say that
the plaintiffs contend that the use by the defendants in connection with the sale of
drugs in this country of the so-called Bayer Cross is an infringement of their trade
mark No. 358,619 and amounts to passing off. The defendants, on the other hand,
contend that the use by the plaintiffs of the word BAYER in connection with the sale 40
of drugs which have not been made by the first defendants is deceptive and counterclaim for the removal of the mark from the register.
276
[No. 10]
Chancery Division
Cross, J.
The paragraphs in the defence which are material to the points which I have to
decide are 20 and 36, which run as follows:
5
10
15
20
25
30
"20. After the outbreak of the 1939-45 War, Bayer Products Limited ceased
to sell goods manufactured by or under the control of Bayer Leverkusen as
aforesaid but nevertheless continued to trade in the same manner as before
and took no, alternatively no effective, steps to inform the public that the goods
it sold were no longer manufactured by Bayer Leverkusen or as stated in paragraph 19 hereof. Further, the entire manner of trading systematically adopted
by the plaintiff both in the United Kingdom and elsewhere from 1939 till the
date of the writ herein was calculated and intended to deceive the public. Particulars of intentional deception exceed three folios and are separately served
herewith.
36. In the premises the plaintiff is not entitled to the relief claimed or any
relief. In particular the deceptive and fraudulent course of trading both inside
and outside the United Kingdom followed by Sterling Drug Inc. acting through
its subsidiaries of whom the plaintiff is one since 1949 and followed by the
plaintiff since 1949 disentitled the plaintiff to the relief claimed or any relief.
The deceptive and fraudulent course of trading in the United Kingdom is part
of a systematic policy of deception in its trading pursued both inside and outside the United Kingdom both by the plaintiff itself and by other subsidiaries
of Sterling Drug Inc. The said course of trading has already been held fraudulent by the Supreme Court of New South Wales in the case of Bayer Pharma
Proprietary Limited v. Henry York & Co. Ltd., which decision is under appeal
and the use of the Leverkusen Bayer Cross by Bayer Pharma Proprietary
Limited has been held deceptive by the High Court of Australia (Full Bench)
in the appeal by Bayer Pharma Proprietary Limited against the refusal to register the Leverkusen Bayer Cross in their name. The said Bayer Pharma Proprietary Limited is a subsidiary of Sterling Drug Inc. Particulars of intentional
deception and fraud are the same as those given under paragraph 20 hereof
which exceed three folios and are separately served herewith."
The particulars given under the two paragraphs are 'extensive. Subparagraphs (a)
to (i) inclusive relate to methods of trading, names used, advertisements, labels, etc.,
employed by the plaintiffs in the United Kingdom since 1939. Subparagraph (j)
relates to the methods of advertising employed by the plaintiffs in the Republic of
35 Ireland; (k) and (1) are as follows:
45
" (k) The method of advertisement employed by the plaintiff in a number of
other foreign countries. Hereunder the defendants rely, inter alia, on (i) a
pamphlet issued in 1951 and headed' Bayer Veterinary Preparations' with the
word BAYER in italic script, and carrying a trade mark containing the words
BAYER and 'London' and depicting the Tower Bridge. The said pamphlet
included a list of agents in a number of countries in many of which rights to the
use of the word BAYER vested in Bayer Leverkusen. (ii) A Winthrop Diary for
1954 issued for use abroad wherein reference is made to Bayer aspirin as a
Winthrop product. (iii) Recent sales abroad of, inter alia, STROMBA as described
in Pulse for 10th March 1962 at page 7.
50
(1) The method of advertisement and course of trading employed by the firm
Bayer Pharma Proprietary Limited, a wholly owned subsidiary of Sterling Drug
Inc., in Australia of which the following are examples: (i) the description of the
aspirin sold as Bayer's aspirin and its description on packages as 'Genuine',
or in advertisements as 'Original and Genuine', or in price lists as 'The
40
277
Cross, J.
Sterling-Winthrop Group Ltd. v,
Farbenfabriken Bayer A.G.
[1969] R.P.C.
Original Brand', sometimes associated with the Leverkusen Bayer Cross; (ii)
the use of the Leverkusen Bayer Cross as a trade mark on diaries and price lists;
and (iii) the use of the phrase 'Bayer products' in literature, for example,
diaries."
The plaintiffs are prepared to disclose all documents in their possession or power :5
whatever emanating from themselves or from their American principals, SterlingWinthrop Inc., or anyone else which relate to their method of trading in the United
Kingdom and the Republic of Ireland, with the exception of documents relating to
the A VERTIN case, to which I will refer in a moment; but they object to disclosing
any documents which may happen to be in their possession whatever relating to 10
the methods of trading adopted by Sterling-Winthrop Inc. and its other subsidiaries
in selling drugs outside the United Kingdom and the Republic of Ireland.
The documents disclosure of which the defendants are asking for under this head
are as follows:
"All letters, instructions, queries, suggestions, notes and memoranda passing
between Sterling Drug Inc. or any person or firm acting on its behalf and
Sterling Drug Inc.'s subsidiaries, other than the plaintiff, or any of them in all
countries except U.S.A. or any person or firm acting on behalf of any of the
said subsidiaries for the period subsequent to 3rd September 1939 connected
with: (a) the policy as to the offer for sale, sale marketing, promotion or other
dealings in pharmaceutical goods bearing the trade mark or trade name or
having the same composition or the same or similar get-up as those supplied by
Bayer Leverkusen prior to 3rd September 1939; (b) the use of the word BAYER,
. the Bayer Cross, the phrases' a Bayer product', , Bayer research', 'Bayer
aspirin " 'Bayer brand of aspirin', 'There is no substitute in quality for a
Bayer product' and other phrases incorporating the word BAYER for use in the
course of trade; (c) the steps to 'be taken by the said subsidiaries or any of them
following enquiries from doctors, pharmacists or others relating to the German
associations of the said subsidiaries or any 'of them; (d) the attemptsby Sterling
Drug Inc. lor the said subsidiaries or any of them to capture markets exploited
, by Bayer Leverkusen or to prevent Bayer Leverkusen recapturing or retaining
such markets."
15
20
25
30
, This extends, of course, far beyond the particulars given under subparagraph (1)
of the particulars of fraud and intentional deception under paragraph 36 of the
~~
~
The defendants supported their claim to have discovery of documents in the
possession of the plaintiffs relating to the trading methods pursued by their American principals through other subsidiaries in other parts of the world by reference to
such cases as Waynes Merthyr Co. v. Radford ,& Co. (1896) 1 Ch. 29 and Ross v.
Blakes Motors Ltd. [1951] 2 All E.R. 689. To my mind, however, such cases have 40
no bearing on this case, In them the acts alleged, if committed, were undoubtedly
wrongful, and when it was admitted or it appeared highly probable that such an act
had been committed on one occasion discovery was ordered to enable the plaintiffs
to see whether other unparticularised actsof the same kind had occurred. If they
had, that fact would throw light on the defendant's state of mind and negative any 45
suggestion of accident. But in this case the real dispute is not as to the course of
trading in fact pursued by the plaintiffs; the dispute is whether in the particular
circumstances in which the plaintiffs found themselves after' the outbreak of the
second War. the plaintiffs .were or were not justified in acting, or their American
278
[No. 10]
Chancery Division
Cross, J.
principals were justified in causing them to act, as they did. I cannot see how the
determination of that question could be assisted by investigating the course of
trading pursued by the American principals through other subsidiaries in other parts
of the world, even if the circumstances prevailing in these various countries were
5 the same as those prevailing here. In fact, of course, there may have been a great
variety of circumstances in the different countries with regard, for instance, tOI local
reputation. I propose, therefore, to disallow this head of the discovery sought
altogether.
A minor question which I was asked to decide relates to trading by the plaintiffs
10 themselves outside the United Kingdom and the Republic of Ireland, I see no
sufficient reason for drawing a distinction between the Republic of Ireland and
other foreign countries, and I think that the plaintiffs should disclose any documents
in their possession or power relating to the matters particularised in paragraph (k)
of the particulars, though not documents relating exclusively to other matters.
15
20
25
30
35
40
I come now to the documents relating to the AVERTIN case. On 3rd August 1939,
the plaintiffs, then called Bayer Products Limited, applied to register that word,
which described a drug made by the German Bayer company, as a trade: mark. The
application was opposed on various grounds by the Association of British Chemical
Manufacturers and eventually dismissed by Mr. Cox, the Assistant Comptroller,
on 12th November 1941, on various grounds, one of which was that the mark had
been so used as to indicate a substance made in and so possessing the credit of the
laboratories of the Bayer organisation in Germany, and that its use on goods not so
made would be deceptive. There was no appeal from the decision. When the application was made, in August 1939, German Bayer owned fifty per cent. of the
plaintiffs' share capital and had a chief say in its day-to-day management, and at
that time A VERTIN was being made in Germany. No-one could suggest that there
was anything improper in the making of the application. But by the time: the judgment was given the position had changed radically, since Bayer drugs could no
longer be obtained from Germany, and once stocks were exhausted the plaintiffs
found themselves faced with the problem how to handle drugs made here. or in
America without, on the lone hand, entirely abandoning their existing names, labels,
get-up, etc., or, on the other, creating in the mind of the purchaser a false idea as
to the provenance of the goods. It is, of course, the contention of the defendants
that the plaintiffs failed to steer clear of deceptive trading. It may well be that it
was the AVERTIN decision which first brought this problem home to the plaintiffs;
and the defendants say, I think quite rightly, that any documents in the possession
or power of the plaintiffs which show their reaction or the reaction of their American
principals to the decision may have considerable relevance. The fact, on which the
plaintiffs rely, that the application was started at a time when they were controlled
by the predecessors in title of the defendants is not, to my mind, of any importance
in this connection.
What the defendants asked for was:
45
"The following documents connected with the decision of Mr. Cox in trade
mark application No. 608,502 dated 12th November 1941; (i) the documents
referred to and identified in the said decision; (ii) documents containing observations by the plaintiff or Sterlin~. Drug Inc. upon th~ ~ecision and .whether the
matter should be appealed; (iii) ,documents containing observations by the
279
Cross, J.
Sterling-Winthrop Group Ltd. v.
Farbenfabriken Bayer A.G.
[1969] R.P.C.
plaintiff or Sterling Drug Inc. as to the propriety of the plaintiff's trading and
advertising methods or policies in the light of the decision; (iv) documents
relating to the question of whether any further applications should be made
for the registration in the plaintiff's name of trade marks under which goods
emanating from Bayer Leverkusen had been sold; and (v) documents dealing 5
with or mentioning the question of the ownership in Great Britain of the goodwill in the word BAYER or the Leverkusen Bayer Cross in the light of the
decision."
The master disallowed subheads (ii) to (v) and substituted therefor" (ii) Minutes
of board meetings of the plaintiff and material documents mentioned in such minutes 10
and the agendas therefor."
I see no reason why this head of discovery should be limited in this way. In my
judgment it should extend to all documents in the possession or power of the plaintiffs which throw any light on the reaction of the plaintiffs or their American
principals to the AVERTIN decision, including in particular those referred to, sub- 15
headings (ii) to (v), as originally drawn.
The last point which I was asked to decide relates to the discovery to be made
by the defendants. The plaintiffs asked for, and the defendants are ready to
disclose:
"All documents or copy documents in the possession, power or custody of 20
the defendants or either of them dated or received between 3rd September 1939
and the delivery of the defence herein (except as already disclosed herein by
the defendants or either of them) as follows: (i) internal memoranda of the
plaintiff, notes of meetings and of conferences of the plaintiff and of its representatives; (ii) all copies of advertisements, price lists, leaflets and brochures 25
issued by the plaintiff in the United Kingdom; and (iii) all copies of letters
written by the plaintiff to members of the public in the United Kingdom which
relate to the plaintiff's use of the name BAYER or the Bayer Cross trade marks."
The plaintiffs further asked for "All documents or copy documents in the possession power or custody of the defendants or either of them relating to the obtaining 30
by the defendants or either of them of any of the documents specified in paragraph
1 above."
What they want to know is when and how the defendants came into possession
of the documents set out in head 1 of which the defendants concede they are to
make discovery. The defendants concede that the dates on which they obtained 35
these documents may be relevant to questions of acquiescence and so on. On the
other hand they submit that the ways in which they becamepossessed of them are
irrelevant and that to disclose these may involve disclosing the names of witnesses.
They suggest that all that the plaintiffs are entitled to under this head can be provided by the defendants making written admissions as to the dates on which the 40
various documents which they disclose under heading 1 came into their possession.
That, I think, is a reasonable solution; and on that footing I will disallow head 2.
The defendants were given leave to appeal to the Court of Appeal and the
plaintiffs leave to cross-appeal.