Trade Marks and Passing off - Hayman-Joyce Property v Hayman-Joyce Broadway
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| Broadway Author Richard Slessor Licence CC BY-SA 2.0 Source Wikimedia Commons |
This was an action for trade mark and copyright infringement and passing off. There was also a counterclaim for invalidation of the trade mark. The claimant and first defendant were estate agencies that had been founded by James Hayman-Joyce. James's son Thomas managed the claimant. The second defendant who had been James's business partner managed the first defendant. The trade marks HAYMAN JOYCE and HAYMAN-JOYCE had been registered by the claimant for various services in classes 35 and 36 under trade mark number UK3350970 in the face of vigorous opposition from the second defendant on 8 Oct 2020.
The Dispute
Relations between the parties began to deteriorate after 2010. There was disagreement over the use of the HAYMAN JOYCE name in Broadway in 2018. They tried unsuccessfully to negotiate a co-existence agreement. After the trade marks were registered, the defendant changed its trading style to HAYMAN JOYCE BROADWAY, registered the domain name <haymanjoycebroadway.co.uk> and circulated a flyer in the claimant's area of exclusivity. The claimant complained that those steps breached an implied licence to use the trade mark and required it to enter a formal licence agreement by 31 Jan 2021 or rebrand.
The Proceedings
The claimant launched these proceedings on 3 March 2022. At a case management conference that took place before HH Judge Hacon on 7 June 2022, the following issues were ordered to be tried:
"Passing Off
1. Whether by and as at November 2020, the C owned goodwill in any estate agency business
under and/or by reference to the signs Hayman-Joyce and/or Hayman Joyce when used alone or in conjunction with the HJ Get-Up or each element thereof other than in the Moreton-in-Marsh area as defined in the Partnership Agreement. If so, what was the nature and geographic scope of that goodwill.
2. Whether by and as at November 2020, D1 owned goodwill in any estate agency business under and/or by reference to the signs Hayman-Joyce and/or Hayman Joyce in November 2020. If so, what was the nature and geographic scope of that goodwill.
3. Whether D1 used the HAYMAN-JOYCE Mark under an implied licence from the C and/or
its predecessors in title. If so,
a. What were the terms of said licence.
b. Did D1 act in breach of those terms in the manner alleged in paragraph 27 of the PoC.
c. When was the licence terminated.
4. Whether the Ds' use of the Signs (as defined in paragraph 32 of the PoC) or each of them
either alone or in conjunction with the HJB Get-Up or elements thereof in the manner
complained of in paragraph 29 of the PoC constitutes a misrepresentation.
5. If so, whether such misrepresentation has caused or is likely to cause the C damage.
6. Whether the Ds' use of the Signs either alone or in conjunction with the HJB Get-Up was
in accordance with honest commercial practices. If so, whether this constitutes a defence to passing off.
7. Whether the C is estopped from pursuing its claim in passing off against the Ds.
Trade Mark infringement – sections 10 (1) and 10 (2)
........
8. Whether the Ds have a defence to the infringement claims by reason of s.11(3) of the Trade
Marks Act 1994.
9. Whether the C is estopped from pursuing its claim for trade mark infringement against the Ds.
Copyright
10. Whether copyright subsists in the Articles, if so, whether the C owns any such copyright.
11. Whether the Ds have infringed any copyright subsisting in the Articles.
Joint tortfeasance
12. If D1 is found primarily liable for acts of infringement and/or passing off and/or copyright infringement, whether D2 has acted in common design with D1 in respect of those acts and he is liable as a joint tortfeasor.
Counterclaim
13. Whether D1 owned goodwill in any estate agency business under and/or by reference to the signs Hayman-Joyce and/or Hayman Joyce by and as at 05 November 2018. If so, what was the nature and geographic scope of such goodwill.
14. Whether the Claimant's trade mark was applied for with the intention to use it to undermine, in a manner inconsistent with honest practices, D1s rights and interests in the Mark. If so, whether it was applied for in bad faith."
The action and counterclaim came on from trial before Recorder Michaels on 7 and 8 Feb 2023. She handed down judgment on 2 May 2023 (see Hayman-Joyce Property Ltd v Hayman-Joyce Broadway LLP and another [2023] EWHC 1028 (IPEC) (2 May 2023)).
"Passing Off
1. Whether by and as at November 2020, the C owned goodwill in any estate agency business
under and/or by reference to the signs Hayman-Joyce and/or Hayman Joyce when used alone or in conjunction with the HJ Get-Up or each element thereof other than in the Moreton-in-Marsh area as defined in the Partnership Agreement. If so, what was the nature and geographic scope of that goodwill.
2. Whether by and as at November 2020, D1 owned goodwill in any estate agency business under and/or by reference to the signs Hayman-Joyce and/or Hayman Joyce in November 2020. If so, what was the nature and geographic scope of that goodwill.
3. Whether D1 used the HAYMAN-JOYCE Mark under an implied licence from the C and/or
its predecessors in title. If so,
a. What were the terms of said licence.
b. Did D1 act in breach of those terms in the manner alleged in paragraph 27 of the PoC.
c. When was the licence terminated.
4. Whether the Ds' use of the Signs (as defined in paragraph 32 of the PoC) or each of them
either alone or in conjunction with the HJB Get-Up or elements thereof in the manner
complained of in paragraph 29 of the PoC constitutes a misrepresentation.
5. If so, whether such misrepresentation has caused or is likely to cause the C damage.
6. Whether the Ds' use of the Signs either alone or in conjunction with the HJB Get-Up was
in accordance with honest commercial practices. If so, whether this constitutes a defence to passing off.
7. Whether the C is estopped from pursuing its claim in passing off against the Ds.
Trade Mark infringement – sections 10 (1) and 10 (2)
........
8. Whether the Ds have a defence to the infringement claims by reason of s.11(3) of the Trade
Marks Act 1994.
9. Whether the C is estopped from pursuing its claim for trade mark infringement against the Ds.
Copyright
10. Whether copyright subsists in the Articles, if so, whether the C owns any such copyright.
11. Whether the Ds have infringed any copyright subsisting in the Articles.
Joint tortfeasance
12. If D1 is found primarily liable for acts of infringement and/or passing off and/or copyright infringement, whether D2 has acted in common design with D1 in respect of those acts and he is liable as a joint tortfeasor.
Counterclaim
13. Whether D1 owned goodwill in any estate agency business under and/or by reference to the signs Hayman-Joyce and/or Hayman Joyce by and as at 05 November 2018. If so, what was the nature and geographic scope of such goodwill.
14. Whether the Claimant's trade mark was applied for with the intention to use it to undermine, in a manner inconsistent with honest practices, D1s rights and interests in the Mark. If so, whether it was applied for in bad faith."
The action and counterclaim came on from trial before Recorder Michaels on 7 and 8 Feb 2023. She handed down judgment on 2 May 2023 (see Hayman-Joyce Property Ltd v Hayman-Joyce Broadway LLP and another [2023] EWHC 1028 (IPEC) (2 May 2023)).
Goodwill
The recorder did not address the above issues seriatim. Instead, she said that the essential issue was that of the ownership of the goodwill in the Hayman-Joyce name. She referred to Lord Oliver's well-known speech in Reckitt & Colman Products Ltd v Borden Inc. [1990] 1 WLR 491, [1990] 1 All ER 873, [1990] UKHL 12, [1990] RPC 341, [1990] WLR 491 but did not quote it. She also referred to Lord Diplock's judgment in Star Industrial Company Ltd v Yap Kwee Kor [1976] FSR 256, [1976] UKPC 2:
"A passing-off action is a remedy for the invasion of a right of property not in the mark, name or get-up improperly used, but in the business or goodwill likely to be injured by the misrepresentation made by passing-off one person's goods as the goods of another. Goodwill, as the subject of proprietary rights, is incapable of subsisting by itself. It has no independent existence apart from the business to which it is attached."
"A passing-off action is a remedy for the invasion of a right of property not in the mark, name or get-up improperly used, but in the business or goodwill likely to be injured by the misrepresentation made by passing-off one person's goods as the goods of another. Goodwill, as the subject of proprietary rights, is incapable of subsisting by itself. It has no independent existence apart from the business to which it is attached."
She directed herself that it is possible for several businesses using the same name to acquire their own goodwill in a business name or to share the goodwill. She added that such goodwill may have evolved independently, or have devolved from a common ancestor as in W. S. Foster & Son Ltd v Brooks Brothers UK Ltd [2013] EWPCC 18.
Miss Michaels found that James's goodwill had extended to a radius of 25 miles from Moreton-in-Marsh before he went into business with the second defendant. She held that the claimant as James's successor has acquired the goodwill that James had built up in the area around Moreton-in-Marsh which the parties called "the Moreton Patch" as well as territory referred to as "no man's land." She also found that the claimant had acquired goodwill in the area around Broadway called "the Broadway Patch" in commercial sales and lettings and residential lettings but not in residential sales.
Miss Michaels noted that James had built up some goodwill in the Broadway Patch before he went into business with the second defendant. James had opened an office in Broadway and had recruited the second defendant to manage it but he went into partnership with him in 1999. The recorder found that the partnership agreement was drafted on the understanding that the partnership would own the goodwill which would be generated by the use of the HAYMAN-JOYCE name in the partnership business, She held that goodwill passed to a limited liability partnership known as Hayman-Joyce Broadway LLP in 2010 and later to the first defendant in 2013. Goodwill accrued since 2010 also belonged to the first defendant. Miss Michaels found that as of November 2020, the first defendant's goodwill extended beyond the Broadway Patch in relation to residential sales in No Man's Land in a 20-mile radius from the Broadway office, but it did not extend into the Moreton Patch. Although the first defendant had made a small number of commercial sales outside the Broadway Patch such sales were not at a level that would have sustained a passing-off action.
She described her conclusion at para [66] of her judgment as "commercially artificial":
"The Claimant and the First Defendant have some areas of exclusivity, and others in which they both own goodwill. They have exclusivity of goodwill for residential sales services in their own Patches, even though the Patches are so close together that it seems to me that offering services for sales in one Patch would in a normal case lead to building up goodwill in part or all of the other Patch. This is underlined by my finding that both sides have goodwill for such services in No Man's Land, especially as No Man's Land includes a narrow strip of land between the Patches, as well as the surrounding areas. In addition, the Claimant has goodwill for residential lettings and commercial sales and lettings services in an area which includes the Broadway Patch. However, I am satisfied that this unusual position arises from the history of the parties' dealings with each other, and the trade which each has undertaken since 1998."
Miss Michaels found that James's goodwill had extended to a radius of 25 miles from Moreton-in-Marsh before he went into business with the second defendant. She held that the claimant as James's successor has acquired the goodwill that James had built up in the area around Moreton-in-Marsh which the parties called "the Moreton Patch" as well as territory referred to as "no man's land." She also found that the claimant had acquired goodwill in the area around Broadway called "the Broadway Patch" in commercial sales and lettings and residential lettings but not in residential sales.
Miss Michaels noted that James had built up some goodwill in the Broadway Patch before he went into business with the second defendant. James had opened an office in Broadway and had recruited the second defendant to manage it but he went into partnership with him in 1999. The recorder found that the partnership agreement was drafted on the understanding that the partnership would own the goodwill which would be generated by the use of the HAYMAN-JOYCE name in the partnership business, She held that goodwill passed to a limited liability partnership known as Hayman-Joyce Broadway LLP in 2010 and later to the first defendant in 2013. Goodwill accrued since 2010 also belonged to the first defendant. Miss Michaels found that as of November 2020, the first defendant's goodwill extended beyond the Broadway Patch in relation to residential sales in No Man's Land in a 20-mile radius from the Broadway office, but it did not extend into the Moreton Patch. Although the first defendant had made a small number of commercial sales outside the Broadway Patch such sales were not at a level that would have sustained a passing-off action.
She described her conclusion at para [66] of her judgment as "commercially artificial":
"The Claimant and the First Defendant have some areas of exclusivity, and others in which they both own goodwill. They have exclusivity of goodwill for residential sales services in their own Patches, even though the Patches are so close together that it seems to me that offering services for sales in one Patch would in a normal case lead to building up goodwill in part or all of the other Patch. This is underlined by my finding that both sides have goodwill for such services in No Man's Land, especially as No Man's Land includes a narrow strip of land between the Patches, as well as the surrounding areas. In addition, the Claimant has goodwill for residential lettings and commercial sales and lettings services in an area which includes the Broadway Patch. However, I am satisfied that this unusual position arises from the history of the parties' dealings with each other, and the trade which each has undertaken since 1998."
Misrepresentation
The claimant alleged that the following acts of the first defendant constituted misrepresentations:
- using the name HAYMAN-JOYCE BROADWAY on its website and on Zoopla and other third-party sites;
- registering such domain names as <haymanjoycebroadway.co.uk>, <haymanjoyceonline.co.uk> and <haymanjoyceproperty.co.uk> and pages on Facebook and Instagram;
- advertising houses for sale outside the vicinity of Broadway on its website;
- reproducing testimonials for the claimant's services on its website; and
- circulating flyers for its services in the Moreton Patch.
The first defendant's continuing use of that name in the areas in which it had goodwill (including those where the claimant also had goodwill) in the manner in which it had historically been used would not amount to a misrepresentation. On the other hand, the recorder did consider that it was a misrepresentation for the first defendant to have advertised its business on its website as selling houses in a 20-mile radius of Broadway. That would clearly have purported to include the Moreton Patch and was not justified as honest concurrent use of its own goodwill. Similarly, it would have been a misrepresentation to use testimonials relating to the claimant's business and to have distributed flyers in the Moreton Patch.
Trade Mark Validity
The defendants counterclaimed for the above-mentioned trade mark registration to be declared invalid under s.47 (2) (b) of the Trade Marks Act 1994:
…
(b) that there is an earlier right in relation to which the condition set out in section 5 (4) is satisfied,
unless the proprietor of that earlier trade mark or other earlier right has consented to the registration."
S,5 (4) provides:
"A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented—
(a) by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade, or
…
A person thus entitled to prevent the use of a trade mark is referred to in this Act as the proprietor of an 'earlier right' in relation to the trade mark."
"A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented—
(a) by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade, or
…
A person thus entitled to prevent the use of a trade mark is referred to in this Act as the proprietor of an 'earlier right' in relation to the trade mark."
The learned recorder referred to para [14] of Lord Justice Patten's judgment in Caspian Pizza Ltd and others v Shah and another [2018] F.S.R. 12, [2017] EWCA Civ 1874 that prior use for s 5 (4) (a) includes use that had generated goodwill in a particular locality. He said at para [18]:
"In SWORDERS Trade Mark dated 28 July 2006 (O-212-06), a decision of the Hearing Officer (Mr Allan James) in opposition proceedings, a challenge was successfully made to the registration of the SWORDERS mark in relation to real estate agency (Class 36) and land surveying (Class 42) services by another firm (originally part of the same firm as the applicant for registration) which had carried on and acquired goodwill in the same name in relation to the provision of similar services in the area of Bishop's Stortford in Hertfordshire. The Hearing Officer found that the opponent's use of the mark had generated sufficient goodwill in the locality to enable it to restrain any other use of the name for the same services and that the application to register a national mark was the equivalent of a notional expansion of the applicant's business into the opponent's area. Absent an agreement by the applicant under s.13 (1) (b) TMA 1994 for a geographical limitation on the registered mark so as to exclude the Bishop's Stortford area, registration of the mark was refused.
"In SWORDERS Trade Mark dated 28 July 2006 (O-212-06), a decision of the Hearing Officer (Mr Allan James) in opposition proceedings, a challenge was successfully made to the registration of the SWORDERS mark in relation to real estate agency (Class 36) and land surveying (Class 42) services by another firm (originally part of the same firm as the applicant for registration) which had carried on and acquired goodwill in the same name in relation to the provision of similar services in the area of Bishop's Stortford in Hertfordshire. The Hearing Officer found that the opponent's use of the mark had generated sufficient goodwill in the locality to enable it to restrain any other use of the name for the same services and that the application to register a national mark was the equivalent of a notional expansion of the applicant's business into the opponent's area. Absent an agreement by the applicant under s.13 (1) (b) TMA 1994 for a geographical limitation on the registered mark so as to exclude the Bishop's Stortford area, registration of the mark was refused.
"It is, I think, implicit in these provisions that opposition under s.5 (4) based on earlier use of the mark does not have to be used throughout the UK or alternatively in a geographical area which overlaps with the place where the applicant for registration actually carries on business using the same or a similar mark. As the Hearing Officer explained in SWORDERS, the application for a national mark operates as a notional extension of the use of the mark over the whole of the country. The only requirement is that the opponent should have established goodwill in the mark over an identifiable geographical area that would qualify for protection in passing off proceedings. Reputation may be enjoyed on such a small scale that it does not generate goodwill at all: see Knight v Beyond Properties Pty Ltd [2007] EWHC 1251 (Ch); [2007] F.S.R. 34. But goodwill which is established in a particular locality will be capable of preventing registration of a countrywide mark."
The recorder said at para [79] of her judgment that in light of her findings as to the first defendant's goodwill, it would have been entitled to prevent the registration of the trade mark in suit because s.5 (4) (a) of the Trade Marks Act 1994 would have applied. The claimant's trade mark application was geographically unlimited and covered residential sales services in the first defendant's area of goodwill. The use of the services included in the specification within that area would have amounted to a misrepresentation. Accordingly, the counterclaim for a declaration of invalidity succeeded.
The first defendant had also sought invalidation of the mark on the grounds that the application had been made in bad faith. The recorder referred to para [47] of the Court of Justice of the European Union's judgment in Case C-104/18 Koton Magazacilik Textil Sanayi ve Ticaret AS v EUIPO [2019] EUECJ C-104/18P, ECLI:EU: C:2019:724, EU: C:2019:724 that there is a presumption that an application is made in good faith unless the contrary is proved. She found that the application had been made on the understanding that the defendants would be offered a licence to use the mark and that there was no intention to prevent their use of the HAYMAN-JOYCE name. She rejected the submission that the marks had been registered in bad faith.
Trade Mark Infringement
The invalidation of the trade mark disposed of the trade mark infringement claim. However, Miss Michaels added that had the registration been valid the mark would have been infringed under s.10 (1) or (2) subject to s.11 (3):
"A registered trade mark is not infringed by the use in the course of trade in a particular locality of an earlier right which applies only in that locality.
For this purpose an 'earlier right' means an unregistered trade mark or other sign continuously used in relation to goods or services by a person or a predecessor in title of his from a date prior to whichever is the earlier of—
"A registered trade mark is not infringed by the use in the course of trade in a particular locality of an earlier right which applies only in that locality.
For this purpose an 'earlier right' means an unregistered trade mark or other sign continuously used in relation to goods or services by a person or a predecessor in title of his from a date prior to whichever is the earlier of—
(a) the use of the first-mentioned trade mark in relation to those goods or services by the proprietor or a predecessor in title of his, or
(b) the registration of the first-mentioned trade mark in respect of those goods or services in the name of the proprietor or a predecessor in title of his;
(b) the registration of the first-mentioned trade mark in respect of those goods or services in the name of the proprietor or a predecessor in title of his;
and an earlier right shall be regarded as applying in a locality if, or to the extent that, its use in that locality is protected by virtue of any rule of law (in particular, the law of passing off)."
She held that the defendants could have relied upon the above section in relation to acts in the Broadway Patch but not beyond it as James's use of the HAYMAN-JOYCE sign in Moreton-in-Marsh predated the second defendant's partnership with James.
Finally, had there been an implied licence to use the HAYMAN-JOYCE name, such licence would have been terminable upon reasonable notice. The deadline of 31 Jan 2021 offered by the claimant was manifestly unreasonable. In the recorder's view, a reasonable notice period would have been 3 months.
For all those reasons she dismissed the claim for trade mark infringement.
Copyright Infringement
The claimant complained of the reproduction on its website of 6 articles that had been written by the claimant's employees or commissioned from third parties. The defendants argued that those articles had been written for the use of both businesses. The recorder held that the defendants had an implied licence to use those documents which was terminated when the claimant asked them to take them down. As the defendants complied with the request there was no infringing use.
Second Defendant's Liability
Relying on the Supreme Court's judgment in Sea Shepherd UK v Fish & Fish Ltd [2015] 4 All ER 247, [2015] 2 All ER (Comm) 867, [2015] WLR(D) 102, [2015] AC 1229, [2015] 1 Lloyd's Rep 593, [2015] UKSC 10, [2015] 1 AC 1229, [2015] 2 WLR 694, the recorder held that the first defendant is and has been controlled by the second and the acts of which the claimant complained were authorized or procured by him. It followed that the second defendant was jointly liable with the first for its acts of passing off and any other wrongdoing.
Conclusion
The learned recorder set out her conclusions at para [90]:
"a. The claim to passing off fails, save in relation to the matters described at paragraphs 73-4 above;
b. The counterclaim to invalidate the trade mark succeeds, and the claim to trade mark infringement therefore falls away;
c. The claim for copyright infringement fails; and
d. The Second Defendant is jointly liable with the First Defendant."
"a. The claim to passing off fails, save in relation to the matters described at paragraphs 73-4 above;
b. The counterclaim to invalidate the trade mark succeeds, and the claim to trade mark infringement therefore falls away;
c. The claim for copyright infringement fails; and
d. The Second Defendant is jointly liable with the First Defendant."
Comment
This dispute arose because each of the parties to a partnership reserved to themselves areas of operation from which the other was excluded. That was workable up to a point so long as the original parties were involved. It unravelled when a third party was introduced. This judgment includes some useful analysis of the authorities on the creation and transmission of goodwill, honest concurrent use and the invalidation of trade marks under s.47 (2) (b) of the 1994 Act.
Anyone wishing to discuss this case should call me on 020 7404 5262 or send me a message through my contact form.
Anyone wishing to discuss this case should call me on 020 7404 5262 or send me a message through my contact form.
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