Thurgood v Laight & Anor [2024] EWHC 2947 (IPEC)
Key points
- The tort of passing off is an important legal principle that helps protect brand owners using unregistered trade marks.
- The classic trinity of passing off requires:
- Goodwill
- Misrepresentation
- Damage
- Goodwill is created through trade and can be modest.
In the case of Thurgood v Laight & Anor[1], the Intellectual Property Enterprise Court considered issues surrounding goodwill in a local dog grooming business and the tort of passing off. This article examines the legal principles and considers the implications for brand owners managing goodwill in local businesses.
Background
The Claimant, Laura Thurgood (Ms Thurgood) brought a claim of passing off against the First Defendant, Danielle Laight, (Ms Laight) and the Second Defendant, Wash, Wiggle & Wag Limited (WWW Ltd).
In 2017, Ms Thurgood began a dog grooming business under the name SCRUFFY2FLUFFY.
On 11 June 2018, Ms Laight responded to a job advertisement posted by Ms Thurgood’s business. At the time, Ms Laight was operating as a dog groomer from her home. It was agreed that Ms Laight would start working for Ms Thurgood’s business as a dog groomer. Ms Laight was engaged as an independent contractor. At the time of her employment, Ms Thurgood’s business was still trading as SCRUFFY2FLUFFY.
On 3 July 2018, Ms Thurgood purchased a mobile dog grooming van. The van had been purchased from an entity which had been trading as WASH WIGGLE & WAG near Northampton. Ms Thurgood gave evidence that the owners of the van did not wish to trade as WASH WIGGLE & WAG any longer and were happy for her to use that name. Ms Thurgood said that, as WASH WIGGLE & WAG was already printed on the side of the van, it was then adopted, alongside SCRUFFY2FLUFFY, as a name for the dog grooming business.
Ms Laight used the van to provide dog grooming services on behalf of Ms Thurgood. This was done by dog owners contacting the business, often in response to advertisements, or following word-of-mouth referral. Ms Laight also set up Facebook and Instagram pages for the business.
The van provided a mobile grooming salon. It would usually park near the customer’s home, and be connected to mains electricity. The dog was then groomed in or near the van.
The business expanded significantly, amassing approximately 700 regular customers.
In around May 2020, Ms Thurgood and Ms Laight’s working relationship ended amid allegations that Ms Laight was taking “off book” appointments. Ms Laight was asked to return the van.
On 29 May 2020, seven days after she had left the business, Ms Laight incorporated Wash Wiggle & Wag Limited (WWW Ltd). Ms Laight commenced trading in dog grooming as Wash Wiggle & Wag and registered the domain name http://www.washwigglewag.co.uk.
Ms Laight continued to use the social media pages of Ms Thurgood’s business and adopted these pages to promote the new dog grooming business. Ms Laight also posted a message on Ms Thurgood’s former Facebook page and among other things, it was stated that Ms Laight “will be making sure my name ‘Wash Wiggle & wag’ is no longer used by them” [Ms Thurgood].
On or about 27 July 2020, the tracker which was previously in the van was now tracking Ms Laight’s movements. The evidence shows that Ms Laight had taken contact details of approximately 250 customers of Ms Thurgood’s business and was making visits to those customers.
The law
Passing off is a common law tort. It has developed to protect the revenue or goodwill of a business contained within a sign from misappropriation by another business by way of misrepresentation. It is often expressed as the three part ‘holy trinity’ of:
- Goodwill in a sign recognised by consumers.
- Misrepresentation by a business that it is economically connected with the owner of the goodwill.
- Damage to the goodwill which is reasonably likely to lead to financial loss.
In Reckitt & Colman Products Ltd v Borden Inc[2] Lord Oliver, said:
First, he 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 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.
Second, 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. …
Third, he must demonstrate that he suffers or … 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.
Goodwill
Goodwill is the attractive force which brings in custom: Inland Revenue Commissioners v Muller & Co’s Margarine[3]. It is revenue attached to a ‘sign’, essentially a word, image, get up or other indicator of commercial origin which is used by customers to identify the trade source of the goods or services.
Misrepresentation
To establish misrepresentation a claimant must show that the representation has led to consumers being misled or are reasonably likely to be misled. The defendant’s intention is irrelevant.
The strength of the goodwill in the sign, the similarity of the sign to the representation, the similarity of the goods and services, the location of the claimant’s and defendant’s businesses, and the characteristics of the market are all relevant to the assessment of the evaluation of whether there is misrepresentation[4].
Damage
The assessment of damage is a consideration of whether the goodwill in the sign, the revenue essentially, is harmed. This is typically a reduced amount of income through a diversion of customers who believe the two businesses are associated.
Application of the law
In Thurgood v Laight & Anor, the issues for determination at trial were:
- Goodwill. Whether Ms Thurgood owned any goodwill under or in connection with WASH WIGGLE & WAG at any material time during the period from about June 2018 onward, including by reason of the use of WASH WIGGLE & WAG by her and/or on her behalf and/or with her licence and/or consent, and if so, to what extent;
- Misrepresentation. Whether the Defendants have, or either of them has, caused or are/is likely to have caused, members of the public to be deceived into believing, contrary to the fact, that: (a) the Defendants’ respective businesses and/or services (or any of them) are or were those of Ms Thurgood, or vice versa; and/or that (b) the Defendants’ respective businesses and/or services (or any of them) are or were endorsed, approved, authorised, licensed or franchised by, or somehow otherwise associated in the course of trade with, Ms Thurgood, or vice versa; and
- Damage. Whether Ms Thurgood has suffered damage to her said goodwill by reason of the said acts of deception and/or the said likelihood of deception.
The judge found:
- Ms Thurgood’s business had established goodwill in the territory in WASH WIGGLE & WAG. The use was in trade and not descriptive of the services. The sign was used to indicate the source of the services.
- Whilst there was clearly some personal loyalty to Ms Laight, and positive reviews of her grooming services, that does not detract from the legal position that the goodwill generated was the goodwill of the business, not Ms Laight’s personally.
- Ms Laight’s adoption of WASH WIGGLE & WAG as the name for her own business grooming dogs in the Territory constituted a misrepresentation.
- There was clear evidence that Ms Laight had diverted customers from Ms Thurgood’s business to Ms Laight’s business – this damaged Ms Thurgood’s business. Customer numbers fell dramatically.
Key takeaways
- Local businesses can accrue goodwill and the right to prevent passing off relatively quickly. Such goodwill belongs to the business owner unless otherwise agreed.
- Registering a business name as a trade mark will always make legal ownership clearer in a dispute.
- Control of communication channels and online branding is critical.
References
[1] Thurgood v Laight & Anor [2024] EWHC 2947 (IPEC)
[2] Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341 at page 5
[3] Inland Revenue Commissioners v Muller & Co’s Margarine [1901] AC 217 (HL) at paragraph 223
[4] Wagamama v City Centre Restaurants [1995] F.S.R. 713
