Protecting your Business Name or Trading Style

Jane Lambert

Every business in the world has some intellectual property even if it has never registered a single patent, design or trade mark. At the very least it will own the goodwill - that is to say the loyalty or other factor appealing to its customers - that is attached to its name, logo or trading style. If someone else uses the same or similar sign in the same market it can lead to a lot of confusion. The business that was here first may lose business to the newcomer, Or the newcomer may get an unmerited free ride on the back of the established trader.

The Clock v The Clock House Hotel 

A good example of that happened nearly 80 years ago in Hertfordshire. It concerned two roadhouses, one called The Clock in Welwyn and the other The Clock House Hotel in Barnet. It resulted in a case that went all the way to the Court of Appeal with King's Counsel and junior barristers on each side. The case, which is called The Clock Ltd v The Clock House Hotel Ltd 53 RPC 269 is still discussed today. Were a similar case to come before the courts now it would probably be decided the same way.

The Dispute

In 1929 The Clock Ltd. opened a roadhouse, that is to say hotel and restaurant near the Welwyn bypass. It was built in the Tudor style and its most distinctive feature was a gabled clock tower. The building was burned down some years ago and it had ceased to be an hotel some years earlier but there are some photos of the establishment in its prime in The Clock Hotel Welwyn by Susan Hall on the Herts Memories website. According to the law report, The Clock House Hotel Ltd, opened an establishment called the Clock House Hotel on the Barnet bypass some 5 miles away in 1934. Fearing the possibility of confusion and consequent damage The Clock House Ltd. applied to the High Court for an injunction restraining

"the Defendants, their directors, officers, servants and agents from carrying on the business of an hotel, road house or restaurant under the name of ' The Clock House,' 'The Clock House Hotel' or 'The Glock House', Hotel, Limited" on the premises now occupied by the Defendants or any name colourably resembling the Plaintiffs' name or the name 'T'he Clock' or from otherwise carrying on business under any description calculated to produce the belief that the Defendants' business is that of the Plaintiffs or that the one is a branch or department of the other."

The company's application was successful. The action was heard by Mr Justice Farwell who granted an injunction in those terms.  The Clock House Ltd appealed to the Court of Appeal but the judges who heard the appeal - Lord Wright MR and Lord Justices Romer and Green - could find no reason for disturbing the decision of the judge below.

Why the The Clock Ltd won

Then as now a claimant in an action for passing off has to prove three things which were summarized conveniently some years later by Lord Oliver in Reckitt and Colman Products Ltd v Borden Inc [1990] 1 WLR 491, [1990] RPC 341, [1990] WLR 491, [1990] 1 All ER 873, [1990] UKHL 12:

"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 or 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. Secondly, he must demonstrate a misrepresentation by the defendant 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 upon 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. Thirdly, 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."

The Clock House had no trouble proving each of those elements.

Goodwill

In his judgment Lord Wright said:

"We have had some illustrations of the road house of the Plaintiffs. They show a very attractive set of buildings equipped for the delectation of the travelling or visiting public. It is equipped with a garden and a lawn; it has a swimming pool, a restaurant and tennis courts 20 which are available in connection with the premises. There is no accommodation for people to sleep other than the domestic staff; there is no sleeping accommodation for visitors. It is not, in any case, a hotel and it has not a licence. The building is in Tudor style and on one side of the building is a clock on a pedestal of its own. Close to the clock is the sign "The Clock, 25 " Welwyn." That business has become very prosperous; it has been very successful and a great many motorists either go there. specially in order to have luncheon, tea or dinner and take part in dancing or other amusements, or stop there on their way up and down the Great North Road. As I have said, that business was established in 1929 and has been going on ever since."

That was sufficient to satisfy the first requirement.

Misrepresentation

Although the defendant did not call its hotel The Clock House with an intention to deceive the trial judge and the Court of Appeal held that that was the result. The businesses were too similar and the distance between them too close to eliminate the risk of confusion.  Because of such confusion there was a real risk that the Welwyn establishment would lose trade to the one in Barnet.

How would this case be handled nowadays?

A similar case today would almost certainly be allocated to the Intellectual Property Enterprise Court and could possibly be heard in the small clams track. The small claims track has jurisdiction in passing off matters so long as damages are limited to £10,000. The case is heard by the district judge. Liability is determined and damages are assessed in the same hearing.  Recoverable costs are limited to just a few hundred pounds. I have written a lot of articles about starting proceedings in the small claims track and a good starting point would be How to take proceedings in the IPEC Small Claims Track 12 July 2014 IP South East.

Further Information

If you want to discuss this matter further give me a ring during office hours on 020 7404 5252 or send me a message on my contact form.