Out-Law Guide | 02 Nov 2007 | 8:31 am | 5 min. read
Efax.Com Inc. v Mark Oglesby
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.
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  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.
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.