Passing off - The Military Mutual Ltd v Police Mutual Assurance Society Ltd

Jane Lambert

Intellectual Property Enterprise Court (HH Judge Hacon) The Military Mutual Ltd v Police Mutual Assurance Society Ltd and others [2018] EWHC 1575 (IPEC) (22 June 2018)

The claimant arranges insurance and mortgages for past and present members of the armed forces.  On the "About Us" page of its website, it describers itself as "a Mutual set up to provide fair, financial services such as Home, Landlord, Military Kit and Business cover to those who are serving, veterans, families and supporters of our armed forces." Note the use of the big letter "M" in mutual,  That is a big part of the company's ethos.  It says that its "manifesto is very simple: always do the right thing for our Members."  The company has no shareholders or employees and is led in the main by retired senior officers who describe themselves as "customers and Members".  Anybody who acquires a policy or mortgage through the claimant company can become a member.   Its business, however, is managed by Regis Mutual Management Limited.

The first defendant arranges financial produces and services for serving and retired police officers.  It also describes itself as a mutual on its "About us" page. It adds that it has been providing its services to police officers in one way or another since 1866 in contrast to the claimant which started trading in 2015.  Unlike the claimant the first defendant conducts its business through subsidiary companies and customers of those companies become members neither of the subsidiary nor the first defendant.

The Claim
The claimant sued the defendants for passing off because they claimed to be mutuals but did not operate as such. It conceded that the first defendant was a mutual but not the subsidiaries and the use of the word "mutual" in the first defendant's corporate name and advertising matter was  misleading.  As the judge observed at para [13] of his judgment, the claimant had no objection to the defendants trading under a name that omitted the word "mutual" or alternatively to their trading in the same way as the claimant  As His Honour also noted at para [3] the claimant was seeking to push the boundaries of the law of passing off further than the courts have had occasion to recognize explicitly.

The Decision
Judge Hacon did push the boundary a little bit.  Noting that all cases on extended passing off had concerned the name of a product, he said at para [67]:

"In principle, I see no reason why the law of passing off should not similarly protect goodwill associated with the name of a type of service. In fact, [the claimant] sought to take things a step further and to protect goodwill associated with a name given to a type of organisation. Again, I see no objection to this in principle. None was raised."

However, that was just about as far as he was prepared to go.  He found no goodwill in the term "mutual" in the sense that it was used by the claimant, no misrepresentation and no damage.  He dismissed the claim at [129].

This is a case that will be read more for the judge's dicta on extended passing off. Particularly his skilful reconciliation of the speeches of Lord Diplock and Lord Fraser in Erven Warnink Besloten Vennootschap v J. Townend & Sons (Hull) Ltd [1979] A.C. 731 with Lord Oliver's goodwill, misrepresentation and damage trinity in  Reckitt and Colman Products Ltd v Borden Inc and others [1990] 1 All ER 873, [1990] 1 WLR 491, [1990] UKHL 12, [1990] RPC 341, [1990] WLR 491.

His Honour took as his starting point para [23] of the judgment of Lord Justice Patten in Diageo North America Inc and another v Intercontinental Brands (ICB) Ltd and others [2011] 1 All ER 242, [2011] RPC 2, [2010] ETMR 57, [2012] Bus LR 401, [2010] EWCA Civ 920:

"The view expressed by the editors of Kerly's Law of Trade Marks and Trade Names (14th edition) is that the classic and extended forms of passing-off are not different torts but are simply convenient labels to describe the two most obvious situations in which the law will intervene to render actionable the misappropriation of established goodwill by a seller based on a misrepresentation by him as to the nature and provenance of his own goods. The question whether this is the correct juristic analysis is probably not critical to the outcome of this appeal. Our task is to apply the law in the form it has now reached rather than to worry about its historical antecedents. But the value of this analysis (which I endorse) is that it confirms what is the essence of the tort of passing-off in all its forms: namely that it is there to protect the goodwill created by the product (whether in conjunction with the claimant's mark or alone) and is not there simply to prevent the misdescription of the goods or the unauthorised use of the claimant's name."

He reasoned that as in classic passing off a claimant bringing an action for extended passing off has to prove goodwill, misrepresentation and damage.  

Starting with goodwill, the judge noted that in classic passing off a claimant has to show that he or she owns goodwill in a business that is associated with a trade name or get-up which distinguishes his or her goods or services from those of other traders. In extended passing off the claimant must establish that there is goodwill in the collective business in a type of product and that the name is distinctive of that type of product among a significant proportion of the public. Where there is joint ownership of the goodwill,  any one or more of the traders can bring an action against anyone misrepresenting a connection with such goodwill. For such goodwill to subsist the product must be clearly defined and consumers must recognize a quality in the goods by reason of their provenance, manufacture or presentation.

Turning to misrepresentation, Judge Hacon said that the public must be led by the misrepresentation to think that the defendant's goods have attributes or characteristics that they do not truly possess. . A misrepresentation may take the form of a false suggestion, created by the defendant's use of the distinctive name in issue, that his product has the same characteristics as the product known by that name - whatever those characteristics may be – and is in that sense genuine.

As in classic passing off, damage may be presumed if goodwill and misrepresentation can be established.

Applying those principles and after considering the evidence His Honour concluded at [118]:

"The evidence does not support [the claimant's] claim to collective goodwill held by that class because the public did not in April 2016 recognise any such class as being distinct. The term 'mutual' had not acquired a narrow meaning used to define the ownership structure of that class. I do not accept that any significant part of the public held the belief that that in the context of financial organisations 'mutual' meant that it must be owned solely by all or some of its customers."

It therefore followed that the shared goodwill claimed by the claimant did not exist.  Further, it was not even clear that there had been a misrepresentation as the first defendant was a mutual in the sense contended for by the claimant and the first defendant and its subsidiaries were acting as a single group.

With the benefit of hindsight it is tempting to look at the judgment and say "but of course" but that would risk missing the point.  I understood the claimant's concern a little better after looking at its TV advert and comparing it to the defendant's video. Notice the emphasis on "family" in both adverts - the "military family" in the claimant's case and the "police family" in the defendant's, the emphasis on public service and the analogy between the service personnel or police officer's service to the community and the claimant and defendants' service to their respective customers.  Had the defendants expanded beyond the police market (and there is a hint of that it might in the title of its 2017 report "Making a difference to police and military lives") it could have been easier for the claimant to frame a cause of action perhaps in classic passing off without reference to the extended variety.

Anyone wishing to discuss this article or passing off generally should call me on +44 (0)20 7404 5252 or send me a message through my contact form.


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