Find out how a complicated trading history leads to shared goodwill (not passing off)
A finding that two Cotswolds estate agents shared goodwill in the name Hayman-Joyce has largely defeated claims of trade mark infringement and passing off.
The background to the dispute was complex, but in essence it arose between an estate agent based in Moreton-in-Marsh (now known as Hayman-Joyce Property Limited) and another based in nearby Broadway (Hayman-Joyce Broadway LLP), which is run by Charles Comber.
For many years, the two businesses traded in parallel, both using the Hayman-Joyce name while remaining financially independent. Each party traded exclusively in a defined geographical area, and both could trade anywhere else (No Man’s Land).
However, at some point after 2010, relations deteriorated. In November 2018, the Moreton company filed a UK series trade mark application for the Hayman-Joyce name. Mr Comber and his service company opposed the application, but the Hearing Officer found they had no locus to do so and the mark was registered.
The Broadway business subsequently started to use the name HAYMAN-JOYCE BROADWAY, registered a domain name incorporating the name and distributed a flyer in the Moreton area. In March 2022, the Moreton office issued proceedings for trade mark infringement, passing off and copyright infringement (in relation to six articles allegedly used without permission).
In her judgment, Recorder Amanda Michaels said the “essential issue” in the case was the ownership of the goodwill in the Hayman-Joyce name. This question was complicated by the different categories of estate agency services provided (e.g. residential and commercial sales and lettings).
She found that the original combined business owned goodwill in an area extending to a 25-mile radius of its office. The subsequent Moreton business had goodwill for estate agency services in the Moreton patch and in No Man’s Land, and for residential lettings and commercial sales and lettings services (but not residential sales) in the Broadway patch.
As for the Broadway business, she found that “the Hayman-Joyce name was an asset of the partnership, not an implied terminable licence dependent upon Mr Hayman-Joyce’s continuing licence or continuing interest in the partnership”. Goodwill owned by the partnership in the Hayman-Joyce name passed on to the subsequent Broadway business, and it also owned goodwill accrued since 2010.
This goodwill extended to residential sales in No Man’s Land in a 20-mile radius from the Broadway office, but not into the Moreton patch. However, its goodwill in relation to commercial estate agency services was only at a “trivial” level. The judge acknowledged:
“My analysis of the legal position leads, unfortunately, to a situation which is commercially artificial. The Claimant and the First Defendant have some areas of exclusivity, and others in which they both own goodwill. … 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.”
Due to the shared (or overlapping) ownership of the goodwill in the Hayman-Joyce name, the Broadway business was entitled to continue using the name for services in which it had goodwill, said the judge: “Acting in this way would not amount to passing off, whether this is due to an ‘honest concurrent use’ defence … or simply reflects the parties' joint or perhaps more accurately shared ownership of the goodwill.”
However, there was misrepresentation – and no honest concurrent use – where there was advertising in the Moreton patch, dishonest use of testimonials and distribution of flyers in the Moreton patch. Any damage arising from this would amount to passing off. Moreover, the judge said that if her findings on shared goodwill were wrong, then there would be misrepresentation, confusion and damage such that a passing off claim was made out.
The findings on goodwill also meant that the trade mark registration was invalid under Section 5(4)(a) Trade Marks Act 1994 (TMA). However, there was no bad faith. If the mark had been valid, there would have been no infringement as the Broadway business had an “earlier right” defence under Section 11(3) TMA.
The “rather insignificant” copyright claim failed, as the articles were used by the Broadway business under licence and removed as soon as a complaint was made.
What does this mean?
This unfortunate dispute arose following several years of apparent harmony between the parties, and it seems as though various opportunities to resolve it amicably by clarifying ownership of the name and permission to use it were missed. A different approach and greater willingness to compromise might have avoided the need for a two-day trial in the IPEC and a fairly complicated judgment.
The case also demonstrates the importance of establishing goodwill in situations where competing businesses use the same or similar names and/or share a trading history. The judge’s granular analysis and finding of shared goodwill effectively determined the outcome of both the passing off and trade mark invalidation issues in this case.
Want to find out more about the IP issues arising from the sale of the whole or part of a business? Get in touch.
To find out more about the issues raised in this blog contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - firstname.lastname@example.org