The National Guild of Removers And Storers Ltd v Bee Moved Ltd & Ors [2016] EWHC 3192 (IPEC)

[2016] EWHC 3192 (IPEC)Case No IP14M02923(formerly CC13P03792)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 13 th December 2016
Before
Mr RECORDER DOUGLAS CAMPBELL QC
Between
THE NATIONAL GUILD OF REMOVERS AND STORERS LIMITEDClaimantBEE MOVED LIMITEDDefendantsNICHOLAS ANTHONY BURNSDefendantOLIVER CHRISTOPHER ROBERT SAMPSONDefendant
Adam Gamsa instructed by Coyle White Devine for ClaimantThomas St Quintin instructed by Backhouse Jones for DefendantsHearing Hearing date: 31 st October 2016
Judgment ApprovedMr Recorder Douglas Campbell QC:Introduction
[1]This is an action in respect of alleged passing off. The Claimant is a trade association which was incorporated on 25 July 1991 and which represents members of the removals and storage industry. The First Defendant is a company which was incorporated on 2 May 2001 and carries on business in the provision of removal and storage services. From 20 April 2006 until 25 June 2010 it was a member of the Claimant. The Second and Third Defendants (“Mr Burns” and “Mr Sampson” respectively) are both directors and 50% shareholders of the First Defendant.[2]The action was commenced by claim form dated 29th July 2014. The Particulars of Claim, which ran to 13 pages and contained 14 Annexes, made a number of points. For instance it alleged that the Claimant was the owner of a very substantial and valuable goodwill in the names The national guild of removers and storers, the guild, and NGRS (“the Names”) when used in relation to removal and storage services. It also alleged that various advertisements relating to the Defendants’ removal and storage services which the Claimant discovered in March and April 2013 amounted to passing off: see ibid at [23].[3]The Defence was served on 5 October 2014. It made a number of admissions, including the following (see [14] thereof):
“ … it is admitted that the Claimant has built up a substantial goodwill in the name ‘National Guild of Removers and Storers’ when used in connection with a trade body operating in the removals and storage industry and it is admitted that such goodwill is owned by the Claimant. It is admitted that members of the public, when seeing that name used in connection with removals and storage services would believe that the person supplying those services to be subject to some arrangement involving the Claimant.”
. However the Defence denied that any of the advertisements complained of amounted to passing off: see ibid at [23].[4]The case management conference was heard by HHJ Hacon on 6 May 2015. By that time, as recorded in the case management conference order, the Defendants had expressly accepted that the Claimant was the owner of goodwill and/or reputation in all of the Names. The issues identified for trial were as follows:
“1) Do any of the following acts amount to passing off by the Defendants and each of them? a) The use of the Names, and each or either of them, in the advertisements on the following websites: http://www.reallymoving.com/removals/directory http://www.bizwiki.co.uk and/or www.beemovedremovals.com/home_removals.html and/or www.removalstoragecompany.co.uk” http://www.reallymoving.com/removals/directory http://www.bizwiki.co.uk and/or www.beemovedremovals.com/home_removals.html and/or www.removalstoragecompany.co.uk”
[5]In his witness statement dated 22 September 2015, Mr Jon Martin (a director of the Claimant) said “I accept that it is difficult to prove that” the First Defendant placed advertisements with either http://www.bizwiki.co.uk or www.removalstoragecompany.co.uk: see [25] and [30] thereof. Thus the Claimant was clearly alive to the difficulties in this part of its case from over a year before trial. However the Claimant did not abandon its claim in relation to either of these 2 advertisements until its skeleton argument was served on the last working day before trial. Whilst the Claimant’s late change of position meant that no time was spent on these 2 advertisements at the hearing, in my judgment the Claimant should have faced up to the difficulties much earlier: see by analogy Mann J in Manvers Engineering v Lubetech Industries Limited [2013] EWHC 3393 (IPEC) at [30].[6]By closing speeches the key issues were as follows: i) Were any of the Defendants liable for the advertisement on www.beemovedremovals.com/home_removals.html (“the Bee Moved advertisement”)? It was conceded by the Defendants that if any of them were liable for this, they all were. ii) Was the First Defendant liable for the advertisement on www.reallymoving.com/removals/directory (“the Really Moving advertisement”)? iii) If the First Defendant was liable for the Really Moving advertisement, were the Second and Third Defendants also liable for it?

Legal context

[7]The relevant principles on passing off are well established and can be summarised as follows: i) In order to succeed the Claimant has to prove goodwill or reputation; misrepresentation; and damage. See eg Reckitt & Colman Products v Borden [1990] RPC 341, HL. ii) Trade associations can bring an action for passing off. See Society of Accountants & Auditors v Goodway [1907] 1 Ch 489; and more recently National Guild of Removers & Storers v Silveria [2010] EWPCC 015, a decision of the predecessor to this Court involving the same Claimant. iii) The question of whether there is a likelihood of deception is a matter for the Court, not the witnesses: see Lord Parker in Spalding v Gamage [1915] 32 RPC 273 HL at [286]. iv) The Court must assess whether a “substantial number” of the Claimant’s customers or potential customer are deceived but it is not necessary to show that all or even most of them are deceived: see Neutrogena [1996] RPC 473 and Interflora v Marks & Spencer [2013] FSR 21. v) Misrepresentation must be more than transitory: see Woolley v Ultimate Products [2012] EWCA Civ 1038 at [4]; Moroccanoil Israel Limited v Aldi Stores Limited [2014] EWHC 1686 (IPEC) at [17]-[28].[8]The Claimant also relied on Wadlow, The Law of Passing Off, paragraph 5-26 in support of the proposition that “It may be passing off for a Defendant knowingly to exploit an intending customer’s own mistake or misconception, even if the Defendant was in no way responsible for the customer making that mistake in the first place”.[9]The authority given by Wadlow for this proposition is the judgment of Briggs J (as he then was) in BSkyB v Sky Home Services [2007] FSR 14. In that case the Defendants were involved in selling extended warranties to subscribers to the Claimant’s satellite television services, and it was clear from transcripts of telephone sales conversations that in some cases the Defendants’ customer was under a self-induced misapprehension that he or she was dealing with the Claimant or an affiliate business. Briggs J referred to the “switch selling” cases, such as Bovril v Bodega, whereby the Defendants had supplied Oxo to customers asking for Bovril and this had been held to amount to misrepresentation by conduct. In the instant case Briggs J held as follows:
“I consider that selling a warrantyto a customer who has made it clear that he thinks he is being offered a warranty from or officially approved by Sky constitutes the same type of misrepresentation by conduct if, as is the case here, the warranty comes from a wholly independent and non-approved source, and the seller does nothing to correct the customer’s mistaken belief”
. Thus in this type of situation the misrepresentation arises because of two specific features. First, the customer has to make it clear that he thinks he is dealing with the Claimant, or an associated source; secondly, the seller does nothing to correct that mistaken belief.[10]The Defendant also relied on Phones4U v Phone4u.co.uk Internet Ltd [2007] RPC 5 at [16]-[19] as regards the difference between mere confusion and deception. In that passage Jacob LJ said this: 16. 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 Reed Executive Plc v Reed Business Information Ltd [2004] R.P.C. 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 trade mark on goods.” 17 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. 18 The current (2005) edition of Kerly contains a discussion of the distinction at paras 15–043 to 15–045. It is suggested that: “The real distinction between mere confusion and deception lies in their 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.” 19 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.”
[11]In this passage Jacob LJ recognises that it is sometimes difficult to distinguish between mere confusion, which is not enough to establish misrepresentation, and deception, which is. The passage from Kerly correctly identifies that the real distinction between the two lies in their causative effect, but is not a complete statement of the position. (See eg Ewing v Buttercup Margarine Co [1917] 2 Ch 1, CA: “To induce the belief that my business is a branch of another man’s business may do that other man damage in all kinds of ways. The quality of the goods I sell; the kind of business I do; the credit or otherwise which I might enjoy all those things may immensely injure the other man, who is assumed wrongly to be associated with me.”). The more complete statement focusses on whether the conduct complained of is “really likely” to be damaging to the Claimant’s goodwill or divert trade from him. This emphasis on “really likely” echoes Lord Fraser in Advocaat [1980] RPC 31 at p 106 line 3. It is implicit in this test that if the conduct complained of is not “really likely” to be damaging then it will be mere confusion.

The witnesses

[12]Three witnesses gave evidence: Mr Jon Martin for the Claimant, and Mr Sampson and Mr Burns for the Defendants. They were all good witnesses who gave their evidence clearly and fairly. The Bee Moved advertisement The evidence

The Bee Moved advertisement

[13]The full advertisement is Annex 13 to the Particulars of Claim. The page itself is headed with a BeeMoved logo and the title “Help with moving home”. There are 4 sub-headings, namely “BEEHOME”, “Packing”, “Professional removal companies”, and “Moving checklist” and bears a date of some time in 2011, which is after the First Defendant ceased to be a member of the Claimant.[14]All of the argument at trial focussed on the following series of 6 bullet points appearing directly under “Moving checklist”:• hire a removal company at least two weeks before you move• use a removal company who is a member of the National Guild of Removers and Storers• get at least three quotes before deciding which one to use. Our associates at Beemoved.com will always where possible supply you with four quality companies in your area• check if the company offers a discount on a weekday• check the fine print in your moving insurance• make a list of your possessions so you can check if you’ve left anything behind…”[15]Mr Sampson confirmed that this checklist appeared on the Defendants’ website and spoke directly to customers. He did not accept that the second bullet point would be interpreted as an implied statement that the Defendants were members of NGRS as in 2011, He said that in his view “it simply suggests that a customer should appoint a removal company who is a member of the organisation”. He agreed that the third bullet point (about getting at least 3 quotes) was not put there in the expectation that the Defendants would lose any customers. He was unable to identify anything here or elsewhere on the Defendants’ website which would make it clear that the First Defendant was not a member of the Claimant.[16]The Defendants pointed out that this webpage did not contain the Claimant’s logo. They also drew attention to the following: i) The Claimant itself used its logo on all of its own business documentation. ii) Mr Martin accepted in cross-examination that the Claimant’s members all either expressly stated they were members of the Claimant or used the Claimant’s logo. iii) The Claimant had disclosed some business documentation for 5 of its 200+ members, and in this documentation these 5 members used the logo.[17]Neither side put in evidence about how many people had seen the webpage in question during the period of nearly 3 years in which this page (or immaterially different versions thereof) were in place.

Analysis

[18]The Claimant argued that the 2nd bullet point impliedly represented that the Defendant was a member of the Claimant. No reasonable member of the public would read that bullet point as saying “use a removal company apart from ourselves”. The third bullet made no difference, particularly since the Defendants did not expect to lose customers as a result of inviting alternative quotes. On the contrary they still hoped and expected to get that customer’s business, even if the customer actually went as far as getting these extra quotes. This was a case where damage to the Claimant’s goodwill was really likely to occur, since members of the public would wrongly believe that the Defendant was a member of the Claimant whereas in fact it was not. The Claimant had lost at least its membership fees, and an immeasurable amount of business.[19]The Defendants argued that the second bullet point was merely general advice and did not constitute any representation about whether the First Defendant was a member of the Claimant. They also relied on the evidence about the logo to argue that any member of the public seeing the webpage in question would notice the absence of the Claimant’s logo on that webpage; and because of that absence, such person would conclude that the second bullet point did not imply any trade connection to the Claimant. They also said there was no evidence about how many people had visited the webpage in question.[20]In my judgment the Claimant’s arguments are correct. This bullet point is not just “general advice” but implies that the Defendant itself was a member of the Claimant, and I accept that this implied representation is damaging to the Claimant’s business and goodwill. This is not a case of “mere confusion”: cf Phones 4U. Nor is there anything which would dispel the misleading impression conveyed: cf Woolley.[21]I reject the Defendants’ arguments about the logo. For a start, the submissions identified in paragraph [19] above are not supported by the evidence identified in paragraph [16]. Even if the logo was in fact always used by the Claimant and its members in all of their documents, it was not established that the public would even notice its absence from this particular web page, let alone attribute any significance to such absence. Furthermore it was not even established that the documentation mentioned in [16(iii)] was typical of documentation produced by the 5 members in question, or that these 5 were typical of the 200+ members.[22]It is true that there is no evidence about the absolute number of people who viewed this webpage over the period in question, but this is because the Defendants (whose website it is) did not adduce any such evidence, and absent such evidence I am not prepared to conclude that the number must have been trivial or de minimis. Moreover this webpage was specifically designed to speak to the Defendants’ customers and it would be wrong to conclude without evidence that it must have failed.[23]The Defendants also sought to run an argument that a later version of this webpage showed the same text but in a different format, whereby there was a box around some of the text but no box around the “moving checklist”, and that this made a difference. This point is not pleaded and is not open to the Defendants: see Part 63.20(1). In any event it is plainly a bad one, since the presence or absence of such a box would not in my judgment make any difference.[24]It follows that all of the Defendants are liable for passing off in relation to this advertisement. The Really Moving advertisement The evidence

The Really Moving advertisement

[25]It was common ground that www.reallymoving.com was a popular and successful website relating to house moving. Mr Sampson explained that the First Defendant had joined it in 2004, and had supplied the website with information about the First Defendant’s activities via a login page.[26]The complaint actually relates to 4 different web entries in virtually identical terms. The only difference between these 4 entries is that one refers to “BeeMoved”, another to “BeeMoved Ltd (Brighton)”, the third to “BeeMoved Ltd (Crawley)”, and the fourth to “BeeMoved Ltd (Tunbridge Wells)”. Neither side suggested that anything turned on this difference. The entry relating to “BeeMoved Ltd (Tunbridge Wells)” is at Annex 11 to the Particulars of Claim and the printout is dated 21st March 2013. It states as follows: BeeMoved Ltd (Tunbridge Wells) BeeMoved specialize in first-class local and national relocations. Our aim is your recommendation. And our guarantee is that you don’t pay anything until the job is completed to your 100% satisfaction. We also offer storage, alarmed and temperature controlled. Our flexible approach means BeeMoved makes your move stress free, no matter the type and size of job. With our fleet of trucks, quality staff and competitive pricing you will BeeMoved with the experience. Member of NGRS.

BeeMoved Ltd (Tunbridge Wells)

[27]It was common ground that the statement “Member of NGRS” was untrue as at 21st March 2013 and the question naturally arose as to how that statement came to be made.

The web crash

[28]Mr Sampson explained that this entry was on a “directory page” within Really Moving, as opposed to the First Defendant’s own “company page” within the same website. The difference was that whereas he was able to and did edit the First Defendant’s company page prior to termination to remove any reference to the Claimant, he had no idea that this directory page existed prior to receiving the letter before action from the Claimant (which was on or about 12th April 2013). Upon receiving that letter before action, he immediately contacted Really Moving to see what had happened and he had been advised by Ms Rosemary Rogers, a Director of Really Moving, that there had been an issue with the Really Moving website. Specifically, he said that Ms Rogers told him that there had been an issue with the website which had caused the system to crash and then replicate itself from a previous edition of the website. Mr Sampson believed that the wording “Members of NGRS” must have come from such a previous edition. In any event he confirmed that the ultimate origin of the wording must have been the First Defendant. For instance he agreed that Really Moving would not have written “our aim”, “our flexible approach”, “our fleet”, etc. Mr Sampson explained that during his discussion with Ms Rogers, he asked that the wording be removed from the website immediately, and it is not disputed that this happened.[29]Mr Burns’ evidence added nothing to that given by Mr Sampson. Mr Burns was not involved in either editing the First Defendant’s entry or in the conversation between Mr Rogers and Mr Sampson. He did, however, make it clear that at no time after termination of membership on 25 June 2010 did he add the wording “Members of NGRS” to Really Moving, nor did he agree to this wording being re-entered in association with the First Defendant.[30]No part of Mr Sampson’s evidence about the website crash was challenged, and I accept it. Nor was it put to either Mr Sampson or Mr Burns: i) That either of them knew of the Really Moving directory pages in question; or ii) That either of them had placed the offending (or indeed any) text on such directory pages; or iii) That either of them intended that the directory pages should carry the offending text.

Schedule B

[31]The Defendants admitted that one of the post termination terms of the relevant agreement with the Claimant had been that the First Defendant would immediately give written notice to all advertisers with whom contracts were subsisting and under which advertisements bearing the NGRS names and/or logos had already been published: see paragraph [20] of the Particulars of Claim, citing clauses 6.1.1. and 6.1.2, and paragraph [20] of the Defence. This was to be done in the form appended as Schedule B, with a simultaneous copy being sent to the Claimant’s solicitors. In cross-examination Mr Sampson admitted that no such form had been sent.

Ms Rogers’ email

[32]Both sides sought to rely on an email sent by Ms Rogers to a recipient identified as partners@reallymoving.com on 18th April 2013. This email refers to contacts between the Claimant’s solicitors and “a few ex-NGRS members on our panel”: see the first paragraph thereof. In particular the Defendant sought to say this email supported its evidence about a website crash, whereas the Claimant sought to rely on Ms Rogers’ statement that “responsibility” for informing Really Moving that a member had left the Claimant lay with the member. I do not accept either submission. First, the email says nothing about a website crash; and in any event the Defendants’ evidence on that topic was unchallenged. Secondly, neither side called Ms Rogers as a witness and I have no insight into why she might have said to the addressees of this particular email at this particular time that this “responsibility” lay with them. For instance she may have been concerned that the Claimant’s solicitors might soon turn their attention to Really Moving itself, given the background which had prompted her email in the first place. I place no weight on this email.

Where did the Defendants’ customers come from?

[33]Both Mr Sampson and Mr Burns were asked about their knowledge of where their customers came from. Mr Burns accepted that the First Defendant was getting customers via the Really Moving website, but neither he nor Mr Sampson knew whether such customers had accessed the offending directory page on that website. However Mr Burns did say that the First Defendant had started asking its customers where they had heard of the First Defendant, and that after a year of asking none had mentioned the Claimant. Thus although the First Defendant had joined the Claimant because it thought that the benefits outweighed the disadvantages (such as membership fees), it subsequently left the Claimant because it had changed its mind. I have no reason to doubt this evidence and accept it.

Analysis

[34]Before going further, it is important to identify what the precise scope of the arguments is. In this Court, such arguments have to be set out in the pleadings in accordance with Part 63.20(1). The relevant paragraphs of the Particulars of Claim are paragraphs [1] (definition of Names), [15] (definition of Defendants), [20] (re Schedule B), [23(a) and (b)] (re www.reallymoving.com) and [26] (re common design). It will be seen from these paragraphs that: i) The only allegation involving this advertisement is that “the Defendants”, namely D1-D3, had been advertising “its” [sic] services under and by reference to the Names on www.reallymoving.com. ii) There is no allegation of any breach of contract, let alone of clauses 6.1.1 or 6.1.2. The only reference to Schedule B is in paragraph [20(d)], but this is simply setting out post-termination terms and there is no suggestion that any of these terms were breached. iii) There is no allegation involving any issues of agency, authorising anything, or procuring anything. iv) The only allegation of common design is one between the Defendants themselves, and does not involve Really Moving.[35]It follows that the argument on Schedule B is not open to the Claimant. The Defendants added that if the Claimant had pleaded that failure to send the Schedule B letter was both a breach of contract and also part of its case on passing off, then the Defendants would have sought to adduce evidence and make submissions in reply. For instance the Defendants said that this breach had never been mentioned in any of the letters following termination and it would have been open to the Defendants to argue that this breach had been waived. Without going into the detail, I accept that the failure to plead this point has prejudiced the Defendants and that this is a further reason not to allow the Claimant to run it.[36]The question then rises as to how it is that the Claimant says the Defendants were liable. The Claimant ran two arguments, as follows: i) First, the Claimant said that since the words originally came from the Defendants then the Defendants were automatically liable for Really Moving’s use thereof. ii) Secondly, they relied on the passage in Wadlow mentioned above. It is not clear to me that either of these arguments is pleaded either, but I reject them in any event.[37]First, I fail to see how the Defendants can be responsible for acts done by an independent third party in circumstances where (as pointed out above) the Defendants did not know of such acts nor did they intend them, and no question of agency, authorisation, or procuring arises. Secondly if the Claimant’s argument is correct, and for some reason Really Moving had declined to remove the text in question when the Defendants asked Really Moving to do so, then it would seem to follow that the Defendants still remain liable forever. That cannot be right. I note that HHJ Hacon expressed a similar reaction when the same Claimant ran a similar argument (albeit expressed in terms of agency) in National Guild of Removers and Storers Ltd v Milner (2014] EWHC 670 (IPEC) at [31].[38]Nor do I see how the passage in Wadlow helps the Claimant either. There is no evidence that anyone who contacted the First Defendant made it clear that he (or she) thought he was dealing with the Claimant, let alone any evidence that the First Defendant failed to correct that mistaken belief.[39]The Defendant also referred me to an earlier decision of this Court involving the same Claimant, namely National Guild of Removers and Storers Ltd v Luckes (District Judge Hart, unreported, 7th March 2016). In particular the Defendants submitted that Luckes was factually very similar to the present one and that the Defendants in that case had succeeded despite having weaker evidence. I agree. That case also involved the prima facie mysterious reappearance of offending text on the Really Moving website. The Defendants in that case had denied giving instructions that this re-introduction should be done, and also denied having any knowledge that it had happened until receiving a letter before action from the Claimant on April 2013. Their evidence on this point was accepted, and the Defendants won this part of the case, despite the fact that the Defendants in Luckes had “no evidence of any technical problem that might have caused the old page to re-load”: see Luckes at [30]. I respectfully agree with the decision in Luckes and as explained above I have reached a similar conclusion in the present case. If the First Defendant was liable for the Really Moving advertisement, were the Second and Third Defendants also liable for it?[40]This does not arise. However if it had, then in my judgment Mr Burns and Mr Sampson would both have been liable with the First Defendant. I say this for the following reasons.[41]There is no dispute of law. I was referred to Sea Shepherd v Fish & Fish [2015] UKSC 10 and to Grenade UK v GrenadeEnergy [2016] EWHC 877 IPEC. Applying that approach, the following are sufficient to establish joint liability: i) First, paragraph [16] of the Defence admitted that the Second and Third Defendants were together the “controlling mind” of the First There is an obvious typographical error here: see also paragraph [14] of the Particulars of Claim. Defendant. ii) Secondly, Mr Sampson agreed in cross-examination that he made decisions, including marketing decisions, jointly with Mr Burns. iii) Thirdly, whilst I agree with the Defendants that neither of them was a party to the contract with the Claimant, and the First Defendant was such a party, I also agree with the Claimant that this makes no difference to their liability in tort. iv) No other reasons were given by the Defendants as to why a finding of joint liability on behalf of the Second and Third Defendants would not follow should the First Defendant have been liable.

Conclusion

[42]The Claimant’s case on passing off succeeds in relation to the Bee Moved advertisement, against all 3 Defendants. The Claimant’s case fails in relation to the Really Moving advertisement.

Cited in 4 later judgments