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.

How to protect an innovative new service.

Jane Lambert

This is a question that I am often asked in IP clinics. The client describes his brainwave for a service that has some innovative features and asks: "Can I get a patent for that?" The answer is almost invariably "no" because patents are granted for inventions and most countries' patent laws including our own make clear that inventions are either products or processes. You can, of course, get a patent for an invention that is used to deliver a service but even then you have to be careful because art 52 (2) of the European Patent Convention excludes from the definition of "invention":

"(a) discoveries, scientific theories and mathematical methods;
(b) aesthetic creations;
(c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers
(d) presentations of information."

as such. The answer I usually give to the question is to rely on a cocktail of intellectual property rights for different aspects of the service.

Confidence

While making plans for your business it is best to keep your ideas to yourself. If you have to take someone into you confidence get him or her to sign a non-disclosure agreement first unless he or she is already bound by an obligation of confidence. It is sometimes possible to keep some technical and commercial information secret after the business is launched. The obligation of confidence is not an intellectual property right. It simply prevents a person to whom commercially sensitive information is disclosed in confidence ("the confidante") from passing that information on to others or using it for his or her own benefit. So long as the information can be kept secret the obligation can last indefinitely. Business and marketing plans, customer account and contact details, manuals and recipes are examples of information that can be protected in this way. It is important to note that the courts will enforce an obligation of confidence only if, and for so long as, the information remains secret. Thus, paper documents have to be kept under lock and key, computer records held in password protected files and staff have to be trained and motivated to keep their employer's confidential information secret.

Trade Marks
Since the reputation of the service provider is likely to be an important consideration for potential customers the service provider should register the sign under which his or her products are supplied as trade marks. Usually these will be the name and logo of the business but it may also be the sign under which a particular service is supplied. The sign must of course be distinctive and it should be registered for the goods or services that the service provider intends to supply over the next 5 years. It can be registered for the UK alone or for the European Union which includes the UK. When registering a trade mark it is important to remember to use the mark for it can be revoked for non-use, to look out for and challenge applications to register similar marks which can be done by registering with a watch service and to make provision for funding such challenges or enforcing the trade mark by taking out before-the-event insurance wherever possible. The small claims track of the Intellectual Property Enterprise Court ("IPEC") provides a low cost forum for infringement disputes while oppositions and applications for revocations and declarations of invalidity of British marks can be heard in the Intellectual Property Office.

Copyright
Manuals, diagrams, computer programs, videos, advertising, promotional and point of sale literature and other materials used in the delivery of a service are usually works in which copyright can subsist. Copyright prevents copying, publication, renting, lending, performance, communication and adaptation of such works but it does not prevent the use of the ideas expressed in those materials. Thus, it is unlawful to copy a business form but it is permissible to create a form that serves the same purpose in a competing business so long as the competitor does not copy or refer to the original form.  As he or she may well be challenged it is important for the competitor to keep an audit trail to prove that his or her form was created independently. There is no system of copyright registration in the UK though there is in the USA and some other countries. All that is required is that a qualified person (a British citizen or resident or citizen or resident of a country with which the UK has a reciprocal agreement which includes most countries) creates an original artistic, dramatic, literary or musical work, a film, sound recording or broadcast or a typographical arrangement of a published work. The work need not be new. It must simply be the product of the author's independent skill and labour. Again, provision must be made for funding infringement actions by insurance or otherwise. The small claims track of IPEC provides a forum for resolving copyright disputes.

Designs
Functional designs can be protected in the UK by an intellectual property right that is almost unique to this country known as "design right."  Ornamental designs can be protected by registration as registered designs under the Registered Designs Act 1949 or as registered Community designs under the Community design regulation. Designs that could be registered either as registered or registered Community designs can b protected from copying as unregistered Community designs,  Those intellectual property rights can cover much of the equipment used in the delivery of a service such as cutlery and crockery in catering, a hair dryer or sun bed in the beauty industry or the uniforms or overalls worn by employees in any industry. Design rights cannot be registered.  All that is required is the recording of the design either in a drawing or other document or the making of a prototype by a British national or resident, the national or resident of another EU member state or national or resident of another state with a reciprocal agreement with the UK. Also, the design must be original in the sense that it involves independent skill and labour and is not a copy of an antecedent work. Registered and registered Community designs must be new and have individual character. They may be registered for 5 renewable terms of 5 years each. The small claims track of IPEC can hear design right claims but not registered design or registered Community design cases.

Database Rights
Customer records, parts lists and other collections of data can be protected by database right. This is a right that prevents the unauthorized extraction and re-utilization of data held in databases and is quite separate from the design of a database that is protected by copyright.

Mixing the Cocktail
The first step is to analyse how the service is delivered and the assets that are used in such delivery. That is best done by an intellectual property audit that can be carried out by a specialist lawyer or patent or trade mark attorney. The next step is to consider the intellectual property rights that can be used to protect those assets. Sometimes there are choices to be made. For example, does the business owner apply for a patent which means that he or she must disclose his or her invention to the world or does he or she hope that he or she can keep it secret and rely on the law of confidence to prevent unauthorized use or disclosure? Those choices sometimes involve establishing priorities which usually depend in turn on the business owner's budget and other constraints. All this is part of an emerging discipline called intellectual property strategy which combines business and legal advice. It is a discipline in which I have a considerable personal as well as professional interest and I have contributed a number of articles to its small but growing literature.

Further Information
Should anybody want to discuss this article or any of he topics mentioned or referred to call me on 020 7404 5252 during normal business hours. You can also contact me through my contact form or message me through Facebook, G+, Linkedin, twitter or Xing.