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OUTER HOUSE, COURT OF SESSION
[2008] CSOH 46
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A123/08
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OPINION OF LORD MATTHEWS
in the cause
WISE PROPERTY CARE
LIMITED
Pursuers;
against
(FIRST) WHITE
THOMSON PRESERVATION LIMITED, (SECOND) WHITE THOMSON PRESERVATION (NORTHERN)
LIMITED and (THIRD) EWAN MACGREGOR WHITE
Defenders:
________________
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Pursuer: Delibegović-Broome; Maclay
Murray and Spens
Defenders: Logan; Drummond Miller LLP
20 March 2008
[1] This
is an action of passing off. It called
before me on 4 March 2008
on the motion of the defenders to recall an interim
interdict granted before calling by Lord Macphail on 26 February 2008. The terms of the interlocutor were as
follows:
"The Lord
Ordinary, having heard Counsel on the unopposed motion of the Pursuers, before
calling, no caveat having been lodged, ad
interim interdicts the Defenders or any of them, whether acting by
themselves, their agents, employees or anyone acting on their behalf or under
their instruction from passing off as those of the Pursuers any service or
business provided by the Defenders and in particular by trading or carrying on
business under or using in their brochures, business cards, stationery,
promotional material and signage or in any other manner in connection therewith
(including but not limited to any use on the internet) the names 'White',
'White Thomson', 'White Preservation', 'White Thomson Preservation' and 'White
Thomson Preservation (Northern)' or any other word or combination of words
colourably similar thereto and likely to cause confusion with the business of
the Pursuers trading as 'White Preservation, a division of Wise Property Care
Limited'."
[2] Mr Logan,
who appeared for the defenders, drew my attention to defences which had been
lodged as well as to two inventories of productions for the defenders.
[3] There
was also an inventory of productions for the pursuers to which reference was in
due course made by Ms Delibegović-Broome
who appeared for them. I refer to
them in the plural, although they are a limited company, since this seems more
natural. The background is that they are
a firm of specialist property surveyors and consultants and their business includes
the investigation and treatment of problems such as dry rot, rising damp and
woodworm. The pursuers aver that they
are one of the leading businesses in that sector in Scotland
but this is not admitted.
[4] In
or about January 2006 the pursuer acquired the business and assets of a company
called White Preservation Limited, which was a well-known property preservation
business in the Fife and Kinross area. It is said that the assets acquired included
the goodwill of the business and the right to use the name "White
Preservation". White Preservation
Limited changed its name to Gragav Limited on 13 February 2006 and was dissolved on 24 November 2006 according to the averments of
the pursuers.
[5] The
pursuers aver that a company controlled by them called Devonside Limited
changed its name to White Preservation Limited on 20 February 2006 and the latter company is a wholly
owned subsidiary of theirs. It is a
dormant company used to preserve the company name "White Preservation" for the
benefit of the pursuers. It is averred
by the pursuers that the business acquired by them has since January 2006,
traded as "White Preservation, a division of Wise Property Care Limited". It is admitted by the defenders that the
pursuers trade as such. The turnover of this
business is said by the pursuers to have been around £900,000 in 2007 with the
projected turnover for 2008 being around £1,070,000. It is also said that the company handles
around 560 customer contracts annually and employs 3 surveyors and
9 specialist technicians. The work
is said to be predominantly based in the Fife and
Kinross area, although it has customers from wider afield who come to it by
recommendation. These details are not
known and not admitted according to the defenders' averments.
[6] There
is a dispute between the parties as to the precise history of White
Preservation Limited.
[7] For
present purposes it is sufficient to note, I think, that the third defender's
father, Thomas White, set up a business in 1976 with a gentleman called Ken
Thomson. In the early 80s that business
was split into two, namely White Thomson Preservation (Southern) Limited
operating in Edinburgh under the
guidance of Ken Thomson and White Thomson Preservation (Northern) Limited
operating in Fife and Elgin
under the guidance of Thomas White.
[8] The
Edinburgh operation has ceased
trading.
[9] Thomas
White's three sons, Gavin White, Grant White and Ewan White, the third
defender, joined him in the "Northern" company, with the third defender
becoming a director in 1984.
[10] In 2002 the three brothers left the company and set up their
own business known as White Preservation Limited. This company traded alongside and in
competition with White Thomson Preservation (Northern) Limited.
[11] The pursuers aver that the latter company went out of business
in or around December 2003, whereas the defenders say that it continued until
2005 when Thomas White retired. His
company was dissolved on 22 October
2005.
[12] It appears that both companies had traded in competition with
each other until the "Northern" company went out of business.
[13] The pursuers aver that White Preservation Limited attracted a
significant amount of business formerly done by the "Northern" company and that
when the latter went out of business the former was perceived by the market
both as a building preservation business in its own right and as a successor to
the business of the latter.
[14] It is averred by the defenders that White Preservation Limited
never acquired the "Northern" company or any of its assets and also refused to
accept its liabilities. White
Preservation Limited refused to take on any timber preservation treatment
guarantees which had been granted by the "Northern" company. All of the introducers in the market were
aware that that was so and knew that White Preservation Limited was not a
successor to the "Northern" company.
[15] In or about July 2004 the third defender's shares in White
Preservation Limited were transferred to his brothers.
[16] The pursuers aver that from 2002 until the business was sold in
2006 the remaining brothers, Gavin and Grant White, worked hard on building up
the goodwill and the business of White Preservation Limited and that they
remained in that business as employees of the pursuers after it was sold. It is said that the business has gone from
strength to strength and is a well-known business in the Fife
and Kinross area.
[17] The averments about goodwill are not admitted and it is pointed
out by the defenders that Grant White left the business shortly after the sale
and is employed elsewhere. That does not
matter for present purposes.
[18] It is averred by the pursuers that due to the early history of
White Preservation Limited, customers often refer to it not just as White
Preservation but still also as White Thomson Preservation and White Thomson.
[19] That averment is denied.
It is averred by the defenders that the pursuers have no right, title or
ownership of the names "White Thomson Preservation" or "White Thomson".
[20] In or about October 2007 the third defender set up the first
defender and in or about January 2008 he set up the second defender. He is the only director of these companies.
[21] Mr Logan explained to me that the third defender was
simply set up to protect the name and did not trade. The first and third defenders were therefore
the real defenders in the action.
[22] The first defenders began trading in or about January 2008 and
they trade inter alia in Kinross and Dunfermline.
[23] The third defender's business card is produced as 7/12 of
process. It shows the first and third
defender's names and indicates that they are consultants and contractors in
woodworm, dry rot and rising damp. It gives telephone numbers in Kinross and Dunfermline
as well as a mobile number and the third defender's email address. It also refers to the first defenders as
having been originally established in 1976 and contains a logo which is the same
as that used by White Thomson Preservation (Northern) Limited. A number of White Thomson Preservation
Limited documents are also produced which have the same general layout.
[24] A business card for one of the surveyors employed by the
pursuers is produced along with a sample document.
[25] There is no physical resemblance between the documentation of
the parties.
[26] I will deal with the remaining averments which are concerned
with the substantial dispute between the parties and the pursuers' apprehended
loss when I consider the submissions made on each side of the bar.
[27] The broad thrust of the pursuers' case is that the defenders
have been offering their services in a way which is calculated to cause
customers and prospective customers to believe that their services are those
which will be provided by the pursuers.
In other words they are passing off their business as that of the
pursuers.
[28] They point to a number of instances which they say indicates
customer confusion, and again I will deal with these in due course. The broad position for the defenders is that
they are the effective successors of White Thomson Preservation (Northern)
Limited. They took on the responsibility
for their guarantees as is known to the various introducers and the third
defender is entitled to use the name White.
He is also entitled to use the names White, White Thomson and White
Thomson Preservation (Northern) Limited.
White is his own name and the pursuers have never traded under the other
names.
[29] It is denied that there was any question of passing off. It is averred that the pursuers are likely to
suffer a loss of goodwill and trade as a result of the activities of the
defenders, but it is said that that is because the parties are in competition
and the pursuers have no right to prevent that.
[30] It was against that broad background that the submissions of
counsel were made.
Submissions for the defenders
[31] Mr Logan indicated at
the outset that the third named defender undertook not to trade as White
Preservation.
[32] He was the owner of the domain name whitethomson.co.uk and he
had been stopped from using that as well, because of the interim interdict.
[33] He submitted that the pursuer had no right to the names White
Thomson, White Thomson Preservation or White Thomson Preservation (Northern)
Limited. These names had nothing to do
with their business and the use of them did not amount to passing off. Mr White was prevented at the moment
from using his own name.
[34] Mr Logan said that Ewan White had been in the business in
Fife for over 20 years through White Thomson Preservation Limited, White
Thomson Preservation (Northern) Limited and White Preservation Limited and he
had also had a connection with another preservation firm by the name of
Richardson and Starling (Northern) Limited.
He was not therefore someone who was coming into an area where he had no
contacts or reputation of his own. The
timber preservation market was an unusual one.
Most of its clients were introduced through intermediaries, principally
solicitors, surveyors and estate agents.
The key market consisted of the intermediaries and most of them had
known the third defender for many years.
[35] Mr Logan drew my attention to the case of Dunlop Pneumatic Tyre Company Limited v Dunlop Motor Company Limited (1906) 8 F.
1146, and in particular to the Opinion of Lord Kyllachy starting at
page 1158.
[36] His Lordship was there criticising the assumption that the
pursuers had some right to the name Dunlop because they were trading under
it. They had no such ownership.
[37] Lord Kyllachy approached the issue on the basis that he
accepted that a number of people would be confused. That, however, was not enough. As his Lordship put it at page 1160:
"But the
question really is, whether the average citizen of Kilmarnock, or perhaps
rather such average citizen proposing to purchase or hire a motor car, would be
likely to be deceived or even confused in the way supposed."
His Lordship went on as follows:
"It remains,
however, to consider whether the complainers have any right to protection
against the respondents' use of the name 'Dunlop' in connection with the sale
of articles - pneumatic tyres etc., and the like - in which the complainers
actually deal. And it is no doubt true
that to some extent both parties appear to deal in tyres and other accessories
of motor vehicles, the complainers doing so as they did during the subsistence
of the Dunlop patents, and the respondents doing so as they did from 1898 to
1904 when they dealt both in cycles and motors under the name of R & J F
Dunlop. As to this, however, it has, in
the first place, to be kept in mind (at least as regards tyres, the articles
mainly in question) that tyres, whether pneumatic or solid, are always, or
almost always, what are called proprietary goods - goods that is to say, sold
under the name of the makers or patentees, and, as a rule, stamped with a trade-mark,
or at least with some name or device."
[38] At page 1161 his Lordship said the following:
"Finally - and
this is an observation which applies to all the minor accessories in which both
parties (the respondents mainly in connection with their repairing business) to
a certain extent deal - the complainers have not proved that they, any more
than the respondents, have acquired an exclusive right in connection with the
sale of those articles to the use of the name Dunlop. Nor have the proved that the name in question
has any special reputation or special value in connection with such articles."
[39] Mr Logan submitted that there was nothing distinctive
about the name or the services of the pursuer.
They were a large company, but there was nothing unique about their
services that was entitled to protection.
[40] Lord Kyllachy went on to observe at page 1161 that the law
had not
"gone the length
the debarring any merchant or manufacturer from selling his goods under his own
name, unless there has been, in addition to the use of that name, some overt
act or course of conduct plainly indicative of fraud - that is to say, of
dishonest effort to pass off his own goods as the goods of another."
Mr Logan submitted that fraud
had to be very specifically averred and that had not happened in the instant
case. When someone was trading under the
name of a company which included his own name, unless there was a fraud or
deliberate deception he could not be stopped from so doing. In these circumstances the interdict granted
was inept.
[41] The House of Lords' decision in Dunlop was at 1907 S.C. (H.L.) 15 and Mr Logan however drew my
attention to the speech of the Lord Chancellor at page 15, where he said
the following:
"The real
complaint in this case was as to the use of the name 'Dunlop'. That name is the true name of the two
brothers who got up the respondent company.
I can see very little proof that anyone was misled by its use and I can
see no proof that any article was bought by anyone from the respondents in the
belief that they were a branch of the appellant company. The two companies do not, to any considerable
extent, in fact deal in the same articles, and I see no ground for thinking
that the little repairing business in Kilmarnock does or
can do any unlawful harm to the appellant company."
[42] Mr Logan agreed with me that the circumstances of the
current case are somewhat different in that other parties dealt in the same
area, namely timber preservation.
[43] Lord James of Hereford
said the following in his speech at page 16:
"Now, in what
does the deception consist, and who were the persons deceived? The complainers have no claim to the
exclusive use of the name Dunlop. It is
a common name in Scotland. The respondents had traded as R & J F
Dunlop. The appellants have chosen to
announce themselves as the Pneumatic Tyre Company preceded by the name Dunlop,
and their case seems to be that, having done so, they shut out persons named
Dunlop from employing that name in connection with a company at all similar in
object to the tyre company. I agree that
the objects of the two companies need not be absolutely identical in order to
entitle the complainers to relief, but there must be great similarity. In this case I do not think that the measure
of similarity established is sufficient, either in the name employed or in the
objects of the trade sought to be carried on."
[44] He then went on to discuss the question, who would be deceived
by the name used by the respondents? It
appeared to be admitted that an ordinary business person would not be misled
but it was alleged that the unwary would. He adopted the judgment of Lord Lowe
in the Division where he said, inter alia:
"I do not think
that the respondents are liable to have their business practically stopped
unless they changed their name simply because a thoughtless person might
unwarrantably jump to the conclusion that they were connected with the
complainers."
[45] In Mr Logan's submission the test really was whether
confusion would be likely to be caused to people if they really thought about
the matter.
[46] He then referred to the case of Phones 4U Limited v Phone4U.Co.Uk.Internet
Limited [2007] RPC 5.
[47] I do not intend to go into the details of this case but
Mr Logan referred me firstly to paragraph 21 of Jacob L.J.'s judgment, where
he said the following:
"In this
discussion of 'deception/confusion' it should be remembered that there are
cases where what at first sight may look like deception and indeed will involve
deception, is nonetheless justified in law.
I have in mind cases of honest concurrent use and very descriptive
marks. Sometimes such cases are
described as 'mere confusion' but they are not really - they are cases of
tolerated deception or a tolerated level of deception."
Paragraphs 22 and 23 of that
judgment are to the following effect:
"An example of
the former is the old case of Dent v Turpin (1861) 2 J & H 139. Father Dent had two clock shops, one in the City,
the other in the West End. He bequeathed one to each son - which
resulted in two clock businesses each called Dent. Neither could stop the other; each could stop
a third party (a villain rather appropriately named Turpin) from using 'Dent'
for such a business. A member of the
public who only knew of one of the two businesses would assume that the other
was part of it - he would be deceived.
Yet passing off would not lie for one son against the other because of the
positive right of the other business.
However it would lie against the third party usurper.
[48] An example of the latter is Office
Cleaning Services Limited v Westminster
Window & General Cleaners Limited (1946) 63 R.P.C. 39. The differences between "Office Cleaning
Services Limited" and "Office Cleaning Association," even though the former was
well-known, was held to be enough to avoid passing off. Lord Simmonds said:
"Where a trader
adopts words in common use for his trade name, some risk of confusion is
inevitable. But that risk must be run
unless the first user is allowed unfairly to monopolise the words. The Court will accept comparatively small
differences as sufficient to avert confusion.
A greater degree of discrimination may fairly be expected from the
public where a trade name consists wholly or in part of words descriptive of
the articles to be sold or the services to be rendered."
[49] In short, therefore, where the "badge" of the plaintiff is
descriptive, cases of "mere confusion" caused by the use of a very similar
description will not count. A certain
amount of deception is to be tolerated for policy reasons - one calls it "mere
confusion".
[50] Mr Logan submitted that the facts of the current case were
similar to those in Dent.
[51] He then drew my attention to paragraphs 9 and 10 of Jacob
L.J.'s judgment, where he referred to the definition of goodwill given by Lord
Macnaughton in Inland Revenue
Commissioners v Muller & Co's Magazine
Limited [1901] AC 217 at 223 to the following effect:
"What is
goodwill? It is 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."
[52] Paragraph 10 went on to quote from the leading speech of
Lord Oliver in the case of Reckitt &
Colman Products Limited v Borden Inc [1990] 1 WLR 491 (the Jif Lemon case)
where he summarised the law in this way at pages 499D - H:
"It has been
observed more than once that the questions which arise are, in general,
questions of fact ... The law of passing
off can be summarised in one short general proposition - no man may pass off
his goods as those of another. More
specifically, it may be expressed in terms of the elements which the plaintiff
in such an action has to prove in order to succeed. These are three in number. First, you must establish a goodwill or
reputation attached to the goods or services which he supplies in the mind of
the purchasing public by association with the identifying 'get-up' (whether it
consists simply of a brand name or a trade description, or the individual features
of labelling a packaging) under which his particular goods or services are
offered to the public, such that the get up is recognised by the public as
distinctive specifically of the plaintiff's goods or services. Second, he must demonstrate a
misrepresentation by the defender to the public (whether or not intentional)
leading or likely to lead the public to believe that goods or services offered
by him are the goods or services of the plaintiff. Whether the public is aware of the
plaintiff's identity as the manufacturer or supplier of the goods or services
is immaterial, as long as they are identified with a particular source which is
in fact the plaintiff. For example, if
the public is accustomed to rely on a particular brand name in purchasing goods
of a particular description, it matters not at all that there is little or no
public awareness of the identity of the proprietor of the brand name. Third, he must demonstrate that he suffers
or, in a quia timet action, that he
is likely to suffer damage by reason of the erroneous belief engendered by 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 plaintiff."
[53] The pursuers therefore had to prove that they had goodwill in
the name which was likely to be damaged by deception.
[54] Paragraphs 16 to 19 of the judgment are to the following
effect:
"The next point
of passing off law to consider is misrepresentation. Sometimes a distinction is drawn between
'mere confusion' which is not enough, and 'deception' which is. I described the difference as 'elusive' in Reid Executive plc v Reid Business Information Limited [2004] RPC 40. I said this [111]:
'Once the
position strays into misleading a substantial number of people (going from "I
wonder if there is a connection" to "I assume there is a connection") there
will be passing off, whether the use is as a business name or a trademark on
goods.'
This of course
is a question of degree - there will be some mere wonderers and some assumers -
there will normally (see below) be passing off if there is a substantial number
of the latter even if there is also a substantial number of the former.
The current
(2005) edition of Kerly contains a
discussion of the distinction at paragraphs 15-043 to 15-045. It is suggested that:
'The real
distinction between mere confusion and deception lies in the causative
effects. Mere confusion has no causative
effect (other than to confuse lawyers and their clients) whereas, if in answer
to the question: "What moves the public
to buy?", the insignia complained of is identified, then it is a case of
deception.'
Although correct
as far as it goes, I do not endorse that as a complete statement of the
position. Clearly if the public are
induced to buy by mistaking the insignia of B for that which they know to be
that of A, there is deception. But there
are other cases too - for instance those in the Buttercup case. A more
complete test would be whether what is said to be deception rather than mere
confusion is really likely to be damaging to the claimant's goodwill or divert
trade from him. I emphasise the word
'really'."
Mr Logan also emphasised that
word.
[55] He said that the test, when one was looking for a prima facie case, was quite a high
one. It was not enough for there simply
to be a possibility of confusion. There
must be a genuine possibility and it must involve a significant impact. The defenders were running a perfectly proper
business and were entitled to do so.
Mr White had taken out proper insurances and the requirements of
trade associations and for the court to interfere there had to be something
very compelling to stop him. The
pursuers in this case did not come close.
[56] All that the pursuers offered in this case were a few instances
of alleged confusion.
[57] I was reminded that there was no interdict sought against the
use of the word "preservation" per se
and that was properly the case. That was
merely descriptive of the services offered by both companies.
[58] As far as the facts were concerned, Mr Logan said there
was not a great deal between the parties.
[59] I have already dealt in some detail with the background and I
do not think I need cover this again.
[60] There was no averment by the pursuers that there was any
connection between White Preservation Limited and White Thomson Preservation (Northern)
Limited other than the suggestion that the former were perceived by the market
as a successor to the latter.
[61] That was not the case, but matters went further than that. When White Thomson Preservation (Northern)
Limited ceased to trade, their guarantees effectively died with them. There was another scheme under which these
guarantees could be honoured, run by Guarantee Protection Insurance Limited.
[62] The pursuers had been asked if they would honour the guarantees
of the defunct company, but they had refused to do so. Mr White's company on the other hand had
accepted that responsibility as was shown by the emails contained in 7/11 of
process.
[63] That showed a clear distinction between the two companies.
[64] Mr Logan said that he was not suggesting that
Mr White was a saint. He had a
clear business strategy. The introducers
had been delighted to learn that his company would take over the guarantees and
that had created a lot of goodwill. He
had designed his business cards and documentation etc., to look in every way as
much like those of the old White Thomson business as possible. As indicated already, the get-up on the
documents was different from that employed by the pursuers.
[65] The reference to the establishment in 1976 was made because
that was when the original White Thomson Preservation Limited was
incorporated. It was Mr White's
company which was the true successor of that company.
[66] The companies admittedly traded in the same general area but a
person who was confused would have had to be determined to be so.
[67] Mr Logan then turned to the specific averments of
confusion set out in Article 13 of condescendence. 13c averred that the appearance of the first
defender in the area of building preservation work in Fife and Kinross prompted
Mr John Haxton of Messrs Ross & Connell, Solicitors in
Dunfermline and Ms Julie Craigie of Andrew Price, Solicitors in Kirkcaldy to
enquire of Mr Gavin White of the pursuers whether he was going into
business with the third defender. Referrals
from other professional advisers are a critical source of business for the
pursuers.
[68] Mr Logan referred to an affidavit from a Hugh Gerard
Short, a solicitor and a senior partner of Ross & Connell. He deponed that he had known Ewan White for years
and generally that he was aware which company was which.
[69] An affidavit from Julie Craigie indicated inter alia that she did not make any enquiry of Gavin White about
whether he was going into business with his brother. She had a conversation with Grant White on or
around 14 January 2008. She had
become aware that Ewan White was going into business and simply asked Grant
White if he was doing so on his own or with Grant White and/or Gavin White. She was wondering this simply because she had
learned that the brothers were now on good terms again, having previously
fallen out for a few years.
[70] In relation to 13a and 13b it appeared that the pursuers had
been contacted by people who were really wishing to engage the defenders. In these circumstances, the pursuers could
hardly complain of suffering any loss.
[71] Article 15 of condescendence made reference to a report by
a firm of professional investigators named Grant & McMurtrie. That was said to show, amongst other things,
that the third defender claimed to have a mail drop facility at the pursuers'
premises and that the first defenders' receptionist claimed that the first
defenders had been established since the 1970s.
As far as the second point was concerned, Mr Logan said that the
report indicated that the receptionist had confirmed that they were two
separate companies. In relation to the
first, he referred to the transcript of a telephone conversation referred to in
the report. While not accepting that the
transcript was necessarily accurate, he was prepared to deal with it on its
terms. His position broadly was that
Mr White had referred to his company as White Thomson on two occasions,
but had then realised that something was afoot and simply played along,
assuming that an investigator was involved.
[72] One particular difficulty the third defender had was that he was
afraid of answering the telephone in his own name in case that would render him
guilty of contempt of court.
[73] For all the reasons he had gone into he submitted that the
pursuers did not have a prima facie
case. Apart from anything else, their
name was White Preservation Limited while the defenders operated under the name
White Thomson Preservation Limited.
[74] If I were against him he submitted that nonetheless the balance
of convenience favoured the recall of the interim
interdict. Mr White had set up a
new business. He had incurred
considerable costs and had accepted guarantees.
He had taken advantage of materials used by the old company in the past. All that effort and expenditure would be
wasted.
[75] Mr White was a man of means and would be able to meet any
damages found due, although the prospect of any finding of liability to pay
damages was remote.
[76] As matters stood he would have to cease trading immediately. The claims of the pursuer were highly
speculative and the balance of convenience favoured the defenders.
Submissions for the pursuers
[77] In the first place counsel
submitted that this case was not about who owned the goodwill, if any, in White
Thomson Preservation Limited or White Thomson Preservation (Northern) Limited. She submitted that the pursuers had
established a prima facie case and
that there were reasonable prospects of success. Reasonable apprehension of injury would
suffice.
[78] There were three elements which she had to prove, namely
goodwill, misrepresentation in the relevant sense and damage or the
apprehension of it.
[79] The authorities showed that a misrepresentation did not have to
be intentional. It really meant the
causing of confusion or a realistic foreseeability of that happening. In addition the use of any name which was
likely to be confused with the established name of another was actionable per se.
[80] Damage did not only consist in trade diversion. There would be damage if the pursuers'
business was wrongly associated with another's.
[81] She submitted that the case of Dunlop, to which I have referred, was a decision on its own facts
after proof.
[82] In the current case we were discussing the question of interim interdict, the parties were
involved in the same field and in any event the law had not remained static.
[83] She referred me to the case of William Grant & Sons Limited v Glen Catrine Bonded Warehouse Limited 2001 SC 901.
[84] Before turning to the Inner House decision, however, she
examined the opinion of Lord Cameron of Lochbroom, dated 19 February 1999 which was not
reported.
[85] The cases of Erven
Warnink Besloten Vennotschap etc. v J
Townend & Sons (Hull)
Limited etc. 1979 A.C. 731 (the Advocaat
case) and the Reckitt & Colman case
were discussed by his Lordship and I do not think I need repeat what was said.
[86] As far as goodwill was concerned I was reminded of the
averments as to turnover. Goodwill had
been adequately averred in her submission.
[87] She reminded me that a misrepresentation did not require to be
intentional and she then turned to pages 68 and 69 of his Lordship's
opinion, dealing with misrepresentation and confusion.
[88] His Lordship said the following:
"For the pursuers
it was submitted that the law was clear.
In the first place, an intention to deceive was not a necessary
component of passing off, although if such an intention was established by
evidence, it could assist the court in reaching a conclusion favourable to the
pursuers on the issue of whether there had been either actual or likely
confusion and damage."
[89] In this regard reference was made to a number of cases and to
the dicta therein. These were Cellular Clothing Company v Maxton
& Murray 1 F. (H.L.) 29, Chill
Foods (Scotland) Limited v Cool Foods
Limited 1977 S.L.T. 38, Stringfellows
v McCain Foods (GB) Limited 1984
R.P.C. 501 and Parker Knoll Limited v
Knoll International Limited [1962]
R.P.C. (265). From these cases I
selected two of the dicta referred
to. In his speech in the Cellular Clothing Company case, at p. 31,
Lord Halsbury L.C. referred to the proposition that no man has a right to sell
his goods or say they were goods of another man. In relation to an argument presented upon
that matter he said this:
"The only
observation that I wish to make upon that part of the argument is that it
seemed to be assumed that a fraudulent intention was necessary on the part of
the person who was using a name in selling his goods in such a way as to lead
people to believe that they were the goods of another person. That seems to me to be inconsistent with the decision
given something like sixty years ago by Lord Cottenham, who goes out of his way
to say very emphatically that that is not at all necessary in order to
constitute a right to claim protection against the unlawful use of words of
things - I say things, because it is to be observed that not only words but
things, such as the nature of the wrapper;
the mode in which the goods are made up, and so on, may go to make up a
false representation; but it is not
necessary to establish fraudulent intention in order to claim the intervention
of the court."
[90] Again in his speech in the Parker
Knoll case at page 278 Lord Morris referred to the straightforward
principle that trading must not only be honest but must not even
unintentionally be unfair. He pointed
out that that case was concerned with the selling of goods "under a mark or
name" and that the fear of the respondents was that if the appellants were
allowed to sell furniture in the way they desired to do, a great many people
would buy furniture in the belief that they were buying the respondents'
furniture whereas they would in reality be buying the appellants' furniture. He went on to set out a number of
propositions in the following terms, which seem apposite to the present case:
"1. No one has any right to represent his
goods as being the goods of someone else ...
2. The court will restrain the making of
any such representation even though it is not made fraudulently ... If A represents his goods as being the goods
of B, then B is likely to suffer and is entitled to be protected whether A
makes a representation innocently or fraudulently. If there is room for doubt as to whether A
has represented his goods as the goods of B, then if there is evidence that A
deliberately intended to and set out to make such a representation that evidence
will in some cases assist to prove that there was in fact such a
representation.
3. A name may be used as a mark under
which a person's goods are sold so that the name comes to denote goods made by
that person and not the goods made by anyone else or even made by anyone else
who has the same name ... The name ... will
have acquired a secondary meaning.
4. If follows that someone may, even by
using his own name and using it innocently, make a representation that is
untrue, that is a representation that goods which in fact are his are the goods
of someone else ...
5. It is a question of fact ... whether it
is proved that a name ... has acquired a secondary meaning so that it denotes or
has come to mean goods made by a particular person and not goods made by any
other person even though such person may have the same name.
6. If it is proved on behalf of a
plaintiff that a name ... has acquired such a secondary meaning, then it is a question
for the court whether a defendant, whatever may be his intention, is so
describing his goods that there is a likelihood that a substantial section of
the purchasing public will be misled into believing that his goods are the
goods of the plaintiff ... In arriving at a decision the court must not surrender
in favour of any witness its own independent judgment ...".
[91] Once a distinctive association between a name and a trader is
proved, the question of course then becomes one whether the use of the same
name by another is calculated to "mislead incautious purchasers" or to "deceive
the unwary" to use phrases which appeared in the speeches of Lord Blackburn in Johnston & Company v Orr Ewing 1882 7 A.C. 219 and by Lord
President Dunedin in Charles P Kinnell
& Company Limited v A Ballantyne &
Sons 1909 S.C. 246.
[92] In approaching this question it appears to me that regard must
be had to the nature of the market and hence of the purchasers within it in
which the respective goods appear ...".
[93] At page 70 his Lordship said
the following:
"The question in
the end of the day becomes that postulated by Lord Diplock in the Advocaat case, namely, whether the use
of the word, name or mark by the other trader is calculated to injure the
business or goodwill of the first trader in the sense that this is a reasonably
foreseeable consequence. That question
is an objective one which the court requires to answer having regard to the
whole evidence led before it."
At page 71 he said the
following:
"It was further
submitted that there is no doubt on the authorities that the use of any name
which is likely to be confused with the established name of another will be
actionable per se, whether design or
get up are also copied or not. Provided
that the necessary element of confusion is satisfied, even bona fide use on goods of a genuine personal or geographical name
could be restrained. I consider that
this submission is well founded on the authorities cited to me."
[94] Counsel repeated then that one needed to establish goodwill,
that an intention to deceive was not necessary, that even if using one's own
name innocently one could be making a misrepresentation which was challengeable
and there was no need for there to be any copying of designs or get up.
[95] The question to what extent a different get up or business card
or the like affected the issue was one of fact.
People might not necessarily have regard to business cards when making
telephone calls and the like so the style of cards might be irrelevant.
[96] I was reminded that the decision in the Grant case was reached after proof.
[97] My attention was drawn to paragraph 50 of the Lord
President's opinion at page 925 of the report to the following effect:
"The present
case relates to passing off - a delict which correspondents to the tort of
passing off in English law. As the facts
of the present case illustrate, moreover, passing off may arise out of
activities occurring in different parts of the United
Kingdom and, indeed, far beyond. It would, therefore, be unfortunate if the
result which I have reached on the basis of the Scottish authorities were out
of line with the result that would be reached, on similar facts, by the English
courts. Happily, in the light of the
authorities to which we were referred, I see no reason to believe that there
would be any significant difference."
[98] In the Grant case the
pursuers had not sought interim interdict
and that was referred to in paragraph 59 of the Lord President's
opinion. In paragraph 60 he went on
to indicate his view that the difficulty of quantifying the damage which the
pursuers might suffer as a result of the defenders' passing off, was in itself
a powerful reason for saying that damages were not the most appropriate remedy
in a case like this. It was an equally
powerful indicator that the remedy of choice was interdict.
[99] It was irrelevant that the potential interdict would cause
actual loss and damage to the defenders.
This was dealt with at paragraph 64.
[100] Of particular significance though was paragraph 79, which
was to the following effect:
"I consider that
the submissions on behalf of the pursuers are to be preferred. The starting point is the statement of
Warrington L.J., as he then was, in Ewing
v Buttercup Margarine Co Limited
at p. 13 where he said that the plaintiff 'has proved that the defendants
have adopted such a name as may lead people who have dealings with the
plaintiff to believe that the defendants' business is a branch of or associated
with the plaintiff's business. To induce
the belief that my business is a branch of another man's business may do that
other man damage in various ways. The
quality of goods I sell, the kind of business I do, the credit or otherwise
which I enjoy are all things which may injure the other man who is assumed
wrongly to be associated with me.'
Here, by parity
of reasoning, the pursuers may suffer damage in a variety of ways if customers
or suppliers are misled into thinking that the defenders' business is
associated with the pursuers'. That may
be particularly the case where, as here, the pursuers aim to project a
particular image of their business which is very different from that of the defenders'
business. In that situation the goodwill
attaching to the pursuers' business is likely to be damaged. Since the Lord Ordinary had accepted that
confusion has occurred, I consider that it would have been appropriate for him
to grant interdict in terms of the first conclusion."
[101] The Lord Ordinary had granted interdict in respect of the
defenders' products but refused it in respect of their business.
[102] Counsel then referred to the Parker
Knoll case to which I have already drawn attention.
[103] The rubric suggests that Lord Guest approved and applied the Dunlop case but in fact at page 287
he said the following:
"I should like
to reserve my opinion upon the question which does not arise for decision in
this case as to whether a person can be restrained from trading under his own
name, where this may lead to confusion with another name. I should add that Scots law upon the general
question does not, in my opinion, differ in any respect from English law,
despite the opinion expressed by Lord Kyllachy in Dunlop Pneumatic Tyre Company Limited v Dunlop Motor Co Limited. The
opinion which he expressed that the law has never gone the length of preventing
a man from selling goods under his own name unless there is fraud was obiter, the decision of the court being
that on the facts there was no proof of passing off."
[104] As I read that case, their Lordships appeared to distinguish
between the carrying on of business in one's own name and the marking of goods
with a person's own name. Lord Denning
drew no distinction between the two but the speech of Lord Hodgson in particular
at page 284 suggests that the distinction is still operative.
[105] Counsel also referred to the case of Sir Robert McAlpine Limited v Alfred
McAlpine plc [2004] RPC 36.
[106] In that case both the claimant and the defendant were well known
construction companies. The family
business had been set up by Robert (later Sir Robert) McAlpine and in 1935 it
was split, essentially on geographical lines.
One company always had the word Alfred in its title and the other always
had the word Robert.
[107] In 2001 the defendants began a re-branding exercise and dropped
the word Alfred from the trading company.
[108] It was common ground that both parties shared the goodwill in the
name "McAlpine".
[109] The claimants' case was that by using the name McAlpine without a
distinguishing feature there was a misrepresentation to the effect that the
services provided or offered by the defendant were those of or associated with
the claimant, or alternatively it was a misrepresentation that there was only
one owner of the reputation and goodwill attaching to the name McAlpine.
[110] The claimant did not assert that it was likely to suffer damage
by divergence of business because by the time contracts were signed a customer
was likely to be well enough informed to know that he was dealing with the
defendant and not the claimant. It
argued that it was likely to suffer damage through loss of business because of
an erroneous association with the defendant in the mind of a customer who had views
about McAlpine but who was not sufficiently well informed to know that there
were two and that his views in fact related to the defendant. The defendant might sustain some bad
publicity which was in fact attributed to McAlpine which rubbed off on a
general way onto the claimant and the defendant might get what he would not
otherwise get because of the exploitation of the joint reputation built into
the name.
[111] It was held by Mann J that passing off had been established.
[112] In his judgment he quoted the speech of Lord Oliver in the Jif Lemon case to which I have already
referred.
[113] The law was generally agreed between the parties, but he made a
number of observations on it. At
paragraphs 19 and 20 he said the following:
"It is not
necessary to go so far as to suggest that one business is that of another. It is sufficient, for purposes of passing
off, if there is a misrepresentation that one business is associated with
another. In Clock Ltd v Clock House Hotel
Ltd (1936) 53 R.P.C. 269 at page 275 Romer L.J. said:
'The principle
is this, that no man is entitled to carry on his business in such a way or by
such a name as to lead to the belief that he is carrying on the business of
another man or to lead to the belief the business which he is carrying on has
any connection with the business carried on by the other man.'
When it comes to
considering damage, the law is not so naïve as to confine the damages to
directly provable losses of sales or 'direct sale for sale substitution'. The law recognises that damage from wrongful
association can be wider than that."
[114] He quoted from Ewing v Buttercup
Margarine Limited and went on:
"In so saying,
he was not limiting the kinds of potential damage to those listed by him. Rather, he was indicating that the subtleties
of the effect of passing off extend into effects that are more subtle than
merely sales lost to a passing off competitor."
[115] At paragraph 39 he indicated that he accepted that most
professionals in the market knew that there were two McAlpine companies and
that those who are actually dealing with either of them would by and large know
with whom they were dealing once they started to deal in earnest. He also accepted that in some contexts and to
many people it would be appreciated that McAlpine or McAlpines would be
correctly understood to mean Alfred.
None of that, however, detracted from the fact that Alfred was seeking
to use a word which was frequently associated with and taken to denote Robert
and use it to promote itself.
[116] He continued:
"The fact that
some are not misled does not prevent there being a misrepresentation and a
person who corrects himself or is corrected by others has still been
misrepresented to."
[117] As far as damage was concerned, counsel referred to paragraphs 44
and 45 of the judgment, which are to the following effect:
"I therefore
have to weigh and assess the risks of damage relied on by Robert in the light
of the evidence. First, there is the
question of the level of risk of a tarnishing of the McAlpine name. This is impossible to quantify, but it is a
possibility. With one exception, no
witness suggests that Alfred enjoyed anything other than a good current
reputation in terms of its work, payment record, creditworthiness, health and
safety matters and all other things that would establish a good business
reputation ... There were no positive
indications that its good reputation was about to change. However, that is not entirely the point. There is a risk. A number of things might plausibly
happen. Alfred's business reputation in
one or more of the areas might change;
or its reputation might be affected by some engineering misfortune which
gains some publicity. Since Alfred is
involved in railway maintenance, views were expressed by one witness that
accidents in that area might affect its reputation, though it was pointed out
that Alfred's railway maintenance activities related to such fixtures as
embankments, and not to such things as the track and signalling, where
reputations might be said to be more vulnerable. Other work was put forward as possibly
causing public opprobrium, such as participating in an environmentally
sensitive road building project.
I do not think
that it can be said that any of these things are probable, but it certainly
cannot be said that they are fanciful.
They are a real possibility in the modern commercial world. I do not think that Warrington L.J. was
insisting in proof of his various items on a balance of probabilities before
they could count as damage for the purposes of passing off. It seems to me to be sufficient that there is
a real risk that the claimant would be affected by one or more of them, or by
similar matters."
[118] I was reminded that this was another case where evidence had been
led.
[119] Nothing in the Phones 4U case
was in any way in conflict with the principles counsel had enunciated.
[120] She had a number of comments to make on the case
nonetheless. Paragraph 6 at
page 86 indicated that Phones 4U
had an established goodwill in August 1999 and there could not be any realistic
use of "Phones 4U.co.uk" albeit innocent, without causing deception.
[121] Paragraph 7 made it plain that the distinction between mere
confusion, which was not enough to be a misrepresentation, and deception, which
was, could be elusive. It was a question
of degree. There could be deception if a
person was induced to believe that there was a connection between two
businesses.
[122] All she required to do at this stage was establish reasonable
prospects of success.
[123] She also drew my attention to paragraph 11 of the rubric at
page 86 to the following effect:
"The judge had
erred in concluding that the absence of actual instances of deception during
over five years side by side user indicated that none had occurred and that the
instances relied on by the appellants were instances of mere confusion. He had failed to consider the size of the
second respondent's business over this period.
The evidence showed that it was exiguous. The judge had also failed to bear in mind
that it was seldom the case that all instances of deception came to light
because the more perfect the deception the less likely that would be so."
[124] From all these cases counsel drew a number of propositions. Three factors were needed to establish
passing off. The first was the existence
in the pursuers of goodwill, although there was no need to show any copying of
their design or get up. A name could
have a secondary meaning. This was the
case with White Preservation Limited.
[125] In the second place there was no requirement to show intentional
misrepresentation. The question was
whether confusion was a reasonably foreseeable consequence of the defenders'
actings.
[126] In the third place relevant damage was not just trade
divergence. There could be many types of
damage caused by passing off.
[127] Counsel then turned to the facts.
[128] She was content to proceed on the basis that White Thomson
Preservation (Northern) Limited ceased trading in 2005.
[129] From then until now the pursuers' business had been operating in
the market place with no one else operating in the area with a similar
name. Whatever had happened to the
goodwill of White Thomson Preservation (Northern) Limited, the pursuers had
operated for three years. The relevant
averments as to goodwill were contained first of all in Article 5.
[130] As I indicated already, their turnover for 2007 was around
£900,000 with the projected turnover for 2008 being around £1,070,000. They handled around 560 customer
contracts annually and employed 3 surveyors and 9 specialist
technicians.
[131] According to Articles 9 and 10 Gavin and Grant White had
worked hard on building up the goodwill and the business had grown from
strength to strength. It was a well known
business in the Fife and Kinross area and it was often
referred to not just as White Preservation but still also as White Thomson
Preservation and White Thomson. I did not
understand her to disagree with the proposition which I put to her that perhaps
Thomas White could have sued his sons for passing off when they set up the
rival company but in the event that is probably neither here nor there.
[132] As far as misrepresentation in the relevant sense was concerned, Ms Delibegović-Broome
referred me to Article 13.
While the instances in 13a and 13b were those of people contacting the
pursuers instead of the defenders, that did not matter. The difficulty was that the two companies
were being falsely associated.
[133] As far as 13c was concerned, the question of confusion was what
mattered. As
far as Article 15 was concerned the subterfuge employed by the private
investigators was something which was commonly employed in the field of passing
off because of the nature of it.
[134] The report of the investigators was No.6/9 of process.
[135] It seemed to me that the first taped telephone conversation was
only notable for the fact that the receptionist answered it by using the name
White Thomson Preservation and later indicated that the company had been
established since the 70s.
[136] In the second conversation the telephonist specifically drew a
distinction between White Preservation and White Thomson Preservation.
[137] Those circumstances did not appear to be of assistance to the
pursuers.
[138] Counsel however drew my attention specifically to the contents of
the third conversation, which was with the third defender.
[139] The first few exchanges are as follows:
"Ewan White: Hello.
David Nelson: Hi there, is that White
Preservation?
EW: White
Thoms ... yes, yes.
DN: White
Preservation?
EW: Yes,
White Thomson Preservation, yes.
DN: White
is that the name?
EW: Yes.
DN: Same
company?
EW: Yes.
DN: Right,
ok, erm, and is it 22 Viewfield Terrace you are at in Dunfermline?
EW: Eh
no, it's 14 Viewfield Terrace.
DN: 14,
ok, so is that the same company at 22 or?
EW: (hesitating)
No they have a mail drop there.
DN: They
have a what sorry?
EH (sic): I have a mail drop at 22.
DN: Ok,
alright, so that is your company but it's just a mail address?
EW: Exactly."
[140] There was thereafter a discussion about the cost of a survey.
[141] The submissions for the defender were that he had simply been
playing along but counsel asked me to exercise caution in accepting that.
[142] Prima facie this
conversation appeared to be of great relevance to the pursuers' case, as I will
expand on shortly.
[143] My attention was then drawn to an advertisement in the Kinross
Community Council newsletter of March 2008.
That consisted of nothing more than a copy of a business card. "White
Thomson Preservation Limited" was written on it in block capitals and
underneath that was written "Consultants and Contractors". Under that again was "Orig. Est. 1976". Under that, in the middle of the card, was
written in block capitals, "Woodworm - Dry Rot - Rising Damp". Under that to the left in block capitals was
written "Kinross 01577-842115" and to the right was written in block capitals "Dunfermline
01383-722307". At the bottom in lower
case was written "email: [email protected]".
[144] This indicated that the defenders were advertising to the general
public and not just professionals.
[145] The fact that confusion could arise was shown by the defenders'
first inventory of productions. 7/6 of
process was described in the inventory as an invoice from Carrick Neill to White
Preservation Limited dated 7 February, 4 February and 25 January
all 2008. In fact the document was an
invoice to White Thomson Preservation Limited.
[146] Articles 16 to 19 of condescendence contained the pursuers'
averments about loss. They went further
than mere trade diversion.
[147] The fear of unquantifiable damage was a very real one. Counsel urged me to bear in mind that the
parties were competing in the same market and it was therefore easier to cause
confusion.
[148] As far as the balance of convenience was concerned counsel
submitted that it lay firmly with the pursuers.
The pursuers were an established business with a significant turnover, a
number of employees and valuable contacts.
On the other side the defenders had just started trading. They could have called themselves anything
but they chose the name White Thomson Preservation.
[149] The pursuers were in a difficult position. In the William
Grant case the Lord President had indicated that interdict was the
appropriate remedy.
[150] In the circumstances the status
quo should be preserved.
[151] It would not be a difficult thing for the defenders to
re-brand.
[152] Counsel then turned to look at some of the submissions made by
Mr Logan.
[153] As far as the Phones 4U
case was concerned, she said that the use of the word "really", to which I have
already referred, did not mean that there was some higher standard of proof
required.
[154] If the pursuers were the fortunate beneficiaries of the goodwill
of the older companies, as had been suggested by Mr Logan, then that was
neither here nor there. It did not
matter who was entitled to the goodwill of the old companies.
[155] It had been suggested by Mr Logan that the terms of the
interdict meant that the third defender was afraid to use his own name when answering
the phone but counsel submitted that the meaning of the interdict was clear and
it was not meant to prevent the third defender from doing so.
Response for the defenders
[156] As far as the advertisement was
concerned Mr Logan said that the publication was run by the Community
Council. The third defender had paid £10
to place an advertisement in January with no idea when it would be
published. The funds simply helped the
Community Council with their projects and their publications.
[157] As it happens the issue came out after the interim interdict was granted, but there had been no intentional
breach.
[158] As far as the Dunlop
case was concerned, Mr Logan submitted that it was still good law,
although it was admittedly a case on its own facts.
[159] Phones 4U was the most
recent case on this issue and he highlighted again the contents of
paragraphs 21 and 22.
[160] The complaint in the William
Grant case arose from the distinctiveness of the brand name. Where the general public had come to know a particular
product by a name, if anyone else made it under the same name there would be
confusion.
[161] One could understand distinctiveness applying to whisky and to Parker
Knoll chairs, but it was difficult to see how that could apply to a damp proof
course.
[162] If all there was was a trading name then we were firmly in the Dunlop territory. As was pointed out in Phones 4U in the paragraphs referred to, there was an accepted or
tolerated level of deception.
[163] Ms Delibegović-Broome's
position had been that the pursuers were merely trying to protect their
goodwill in White Preservation Limited.
They were seeking to do that by preventing the defenders from using the
name White Thomson Limited. The third
defender was in fact trying to take advantage of the benefits flowing from the
name White Thomson. He was presenting
himself as a successor to an older company.
[164] That did
not assist us in dealing with the question whether there was fraud or
misrepresentation and Mr Logan accepted that it did not have to be
intentional. The matter had to be looked
at objectively. One also had to look at
the get up. Was there likely to be any
misunderstanding or confusion in the minds of the public? Until 2005 it was a fact that there were two
companies in the field. The market knew
that there were two distinct companies.
This was a different situation from that which pertained where one was
in place and a new one was set up.
Parker Knoll was a well-established company before Knoll International
came in, but that was not the factual situation we were dealing with. The fact that there had originally been two
companies was something which I had to take into account. It impacted on the knowledge and
understanding of the market place and that could be seen in the
affidavits.
[165] The
averments in Article 13 did not support the pursuers' case. There was no question but that introducers
were fully aware of the position.
[166] In
relation to the Phones 4U case, he
again emphasised the word "really". He
said that that meant that there had to be a significant impact. Was there a real risk of damage?
[167] The McAlpine case was also
distinguishable. The defenders in that
case had originally had a distinct name, but they had removed the
distinction. In the current case the
defenders had created a distinction by the addition of the word Thomson.
[168] McAlpine had also referred to the
question of the market place.
Mr Logan submitted that there was a difference between
professionals who were simply involved in dealings with a company and those who
contacted them in the exercise of a choice to do business with them.
[169] I
confess that I found this to be a distinction without a difference.
[170] He
accepted that any loss to the defenders was irrelevant if perpetual interdict was
under consideration but that did not apply when an interim interdict was being considered and the balance of
convenience had to be dealt with.
[171] As far
as that aspect was concerned, I was urged to hold that were the interim interdict to remain in place it
would not in fact preserve the status quo. Prior to its grant there had been two
companies, both offering their services in Fife. Until 26 February the defenders had been
trading under the name White Thomson Preservation Limited.
[172] They
already employed 4 specialists, but they had had to stop trading.
[173] The
pursuers were said to be an established business who might suffer damage. The issue of turnover was overstated. If there was any loss of goodwill or
business, it would be at the margins.
[174] The
defenders had incurred costs in setting up the business, they had taken on
guarantees and fulfilled the requirements of trade organisations. Everything
they had done to date would be rendered worthless. Letterheads and cards could be changed, but
that was not satisfactory. The important
feature for the defenders was that White Thomson Preservation Limited was a
name they had taken on deliberately because of its relationship with the name
of the old company and to show that White Thomson was back in business. Their loss was an inability to trade in that
name and use the goodwill which it had generated.
[175] There
was thus clear loss to the defenders but none to the pursuers.
[176] If they
were suffering actual loss then they could be compensated by way of
damages.
Discussion
[177] This was a somewhat lengthy and complicated
motion, but at the end of the day it seemed to me that the issues were fairly
clear cut.
[178] I have
already dealt with the background.
[179] From at
least 2005 until 2008 when the third defender set up his companies, the
pursuers had traded in the market place under the name White Preservation
Limited.
[180] The
incorporation of White Thomson Preservation Limited has undoubtedly led to
competition in the very same market place.
[181] It
seemed to me that in order to succeed in the action of passing off the pursuers
required, as did not appear really to be in dispute, to establish that they
owned sufficient goodwill, that there was a misrepresentation in the relevant
sense and that damage was reasonably to be anticipated.
[182] I had
little difficulty in holding that there was a prima facie case that the pursuer had goodwill which they were
entitled to protect.
[183] Was
there likely to be confusion? It seemed
to me on the authorities that this was a question which had to be answered
looking at the matter objectively. The
pursuers' company is called White Preservation Limited and it operates in the Dunfermline and Kirkcaldy area as well
as in St Andrews and Angus.
[184] In
particular they have a place of business at 22 Viewfield Terrace, Dunfermline. Whether or not that is a mail drop does not
matter. It is an address associated with them.
[185] The
defenders White Thomson Preservation Limited operate in the same field from
Kinross and Dunfermline. Their address
in Dunfermline is 14 Viewfield
Terrace.
[186] Right
away one can see that there is room for confusion.
[187] It
struck me as obvious that even discerning customers might well assume that the
business were associated in some way or other.
[188] The
pursuers are entitled to prevent such association in the minds of customers in
line with the authorities to which I have referred.
[189] I agreed
with Ms Delibegović-Broome that loss through diversion of trade is
not the only type of damage which may be prevented.
[190] Thus far
I do not think that what I have said is particularly controversial or
difficult. However, the case of Dunlop as well as the Parker Knoll case and authorities
referred to therein, are authority for the view that there is a distinction
between applying a name to goods which are sold and operating a business under
that name.
[191] If
Mr Logan is right then a man may operate a business under his
own name, even if it causes confusion, provided he does not do so
dishonestly.
[192] Even if
the comments of Lord Kyllachy in Dunlop
were obiter, which I think they were,
can the same be said of the comments of Lord Hodgson at page 284 of the
report of the Parker Knoll Limited
case?
[193] He
referred to the decision of Romer J in Joseph
Rodgers & Sons Limited v W.N.
Rodgers & Company (1924) 41 R.P.C. 277, 291 where he said this:
"It is the law of this land
that no man is entitled to carry on his business in such a way as to represent
that it is the business of another, or is in any way connected with the
business of another; that is the first
proposition. The second proposition is
that no man is entitled so to describe or mark his goods as to represent that
the goods are the goods of another. To
the first proposition there is, I myself think, an exception: a man, in my opinion, is entitled to carry on
his business in his own name so long as he does not do anything more than to
cause confusion with the business of another, and so long as he does it
honestly. It is an exception to the rule
which has of necessity been established ...
To the second rule, to which I have referred, I think there is no
exception at all; that is, that a man is
not entitled so to describe his goods as to lead to the belief that they are
the goods of somebody else. It is not
necessary that there should be an exception to that."
[194] Lord
Hodgson went on to say the following:
"The statement of Romer J in
Rodgers' case notes the distinction
which is drawn between trading under a name and passing off of goods by the use
of a name. The distinction noticed by
Romer J was accepted as correct by Viscount Simonds in Marengo v Daily Sketch &
Sunday Graphic Limited. The
exception to the rule in the case of trading under a name is exemplified by
authorities such as Turton v Turton (1889) 42 Ch. 128 which was a case of
trading, not passing off, in which strong and unqualified language was used
upholding the right of persons to use their own names provided they did so
honestly. Other cases in the books
contain similar language, but with the exception of Lord Greene's observations
in Wright's case there is no trace of
this exception being applied to cases of passing off of goods in this country."
[195] Lord
Morris of Both-y-Guest also referred to the Rodgers'
case in his speech. Furthermore, at
p.279, he quoted Lord Simonds in the Marengo
case (Marengo v Daily Sketch & Sunday Graphic Limited
(1948) 65 R.P.C. 242, 251) as follows:
"It is an unassumable general
proposition that the interests alike of honest traders and of the public
require that the goods of A should not be confused with the goods of B. But that proposition is subject to the
qualification that a man must be allowed to trade in his own name and, if some
confusion results, that is a lesser evil than that a man should be deprived of
what would appear to be a natural and inherent right. But ... it is a fantastic gloss upon this
well-established qualification to say that it justifies a trader in placing
upon his goods a mark which, however much he may intend it to signify his name,
is yet liable to suggest to reasonable men the name of another."
[196] The use of one's own name as a trading name may
have different consequences from the use of one's own name on goods, in
particular circumstances.
[197] In most
cases I would expect that the evidence in favour of passing off would be such
that any defence of using one's own name would fall by the wayside because the
dishonest intention to cause confusion could readily be inferred.
[198] I do not
think that I need to develop the point further at this stage in this case.
[199] In the
first place, as Ms Delibegović-Broome pointed out, the name of the
offending company is not simply the third defender's own name. It has added to it the word Thomson and the
word Preservation Limited. The word
Preservation is of course merely descriptive, the word Limited has no
significance in the current context and the addition of the word Thomson is a
point of distinction.
[200] Nonetheless
it is not simply a family name.
[201] In any
event I was satisfied that the contents of the telephone conversation with the
third named defender provide a prima
facie basis for an assertion that he was acting dishonestly and was deliberately
fomenting confusion, albeit he may have been led into it.
[202] The
averments as to potential loss and damage were in my opinion sufficient also to
establish a prima facie case.
[203] In
short, therefore, I was satisfied that the pursuers had presented a prima facie case.
[204] I was
also satisfied that there were reasonable prospects of success.
[205] That
left me with the question of the balance of convenience. On the one hand I was conscious that the
maintenance of the interim interdict would
effectively stop the defenders in their tracks as they were currently
constituted. If they wished to continue
in this business then they will have to re-brand. Once they had done that, it might be that
there would be little point in their reverting to the White Thomson name in the
event that they were ultimately successful.
That would mean that the maintenance of the interim interdict would almost be determinative of the issue, other
than in relation to damages.
[206] On the
other hand I had been told that Mr White was himself well-known in the
business and had been for around 20 years.
I did not recall any suggestion that he would have any difficulty in
establishing contacts if he were to re-brand and whilst there would be a certain
amount of inconvenience and expense involved in that it would not present
insurmountable difficulties.
[207] If I
recalled the interim interdict then
in my judgment there was likely to be confusion of the sort which has been
averred in Article 13 and that would have an unquantifiable effect on the
pursuers' business.
[208] They had
been in business, on any view for 3 years, without competition from a
similarly named firm. The fact that
there had been such competition until 2005 was of no significance in my
opinion.
[209] Matters
might have been different had the third defender carried on his father's
business in a seamless transition, but even then, pace what was said in Phones
4U about the Dent v Turpin case, he would not have been
allowed to pass his established business off as being in some way associated
with the other one.
[210] It will
be seen that the contents of the telephone conversation were of significance in
my opinion.
[211] While it
would not have been appropriate to form a concluded view in the absence of
evidence, the defenders' explanation for what he said, assuming it was
accurately recorded, appeared prima facie
implausible.
[212] That was
not quite an end of the matter though.
[213] There
was plainly no intention on the part of the pursuers to prevent the third
defender from answering the telephone in his own name and the like.
[214] I could
nonetheless understand why that caused him some anxiety.
[215] In the
circumstances while I was not prepared to recall the interim interdict I decided
that I should attempt to make the position clear.
[216] There were
probably a number of ways in which this could have been done, but I decided to
follow the lead of the Court of Appeal in the Parker Knoll case which found favour with the House of Lords.
Decision
[217] I varied the interim interdict of 26 February 2008 by the addition at the end
of the words "provided that this order is not to interfere with any bona fide use by the third defender of
his own name as an individual". Quoad ultra the motion to recall the interim interdict was refused.
[218] Needless
to say, I was very grateful to both counsel for their diligent researches and
presentation of the issues.
