On 31 March 2004, Sir Robert McAlpine Limited was successful in the English High Court in its claim for passing off against the former same family company, Alfred McAlpine Plc, which recently attempted to re-brand as "McAlpine".
Background
The construction company Alfred McAlpine Plc ("Alfred") carried out a re-branding exercise in October 2003, dropping the name "Alfred" and introducing a stylised logo, namely a purple lozenge containing the word "McAlpine". Sir Robert McAlpine Limited ("Robert") commenced proceedings for passing off, arguing that it shared the goodwill in the McAlpine name and that in using the McAlpine name without including the distinguishing forename Alfred was misrepresenting the construction services offered by it to be, at the very least, still associated with Robert.
Alfred and Robert had co-existed in the construction industry since 1935, when the McAlpine family business was split to deal with distinct geographical areas. After the geographical limitations were abandoned in the early 1980s, Robert and Alfred remained conscious of the need to distinguish between the two companies and it had been informally understood by them both that they should always use their forenames when referring to their respective businesses.
As both companies carried out significant amounts of work in the field of civil engineering, there was significant overlap in their dealings. The central question was as Robert and Alfred shared the goodwill in the McAlpine name in this area, could the use by Alfred of the word "McAlpine" alone amount to passing off?
Outcome
Applying the classical trinity approach first adopted in the Jif Lemon case (Reckitt & Colman v Borden [1990] RPC 341), the trial judge (Mann J) considered whether the ingredients needed for a successful passing off action - goodwill, misrepresentation and damage had been established in the unusual circumstances of this case. He found that goodwill could be shared by two entities and accepted that this was the position in the present case.
As to misrepresentation, it was held that the sole use of "McAlpine" by Alfred in the construction industry would in some circumstances be understood to refer to Alfred but in others to Robert. Accordingly the judge found there had been misrepresentation.
The judge observed that the issue of damage was the most difficult aspect of the case. As proceedings were issued immediately following the re-branding exercise there was not yet any clear evidence of any type of damage. Furthermore this was not a classic case of business being diverted from one company to another - "By the time contracts are signed, a customer (employer) is likely to be well enough informed to know that he is dealing with Alfred and not Robert, if he had ever thought otherwise".
However the judge noted that less tangible damage may occur. Alfred presently enjoyed a good business reputation in terms of its work, payment record, creditworthiness, health and safety matters and all other relevant matters. However the judge felt that Alfred actions had increased the "possibility" of tarnishing to Robert’s reputation should Alfred’s business be affected by some engineering misfortune which gains some publicity or other adverse change.
He also referred to the Eddie Irvine v Talksport case and Laddie J’s comment that "The law will vindicate the Claimant’s exclusive right to the reputation or goodwill. It will not allow others so to use goodwill as to reduce, blur or diminish its exclusivity." As this was an action between joint owners of goodwill there was no "exclusivity" as such so this comment could not directly be applied but its underlying thesis could. This was that English law "looks at the value of the goodwill to the claimant and recognises that if someone else lays claim to it, that, of itself, is damage which the law will step in to prevent." Alfred had taken steps which suggested that it was the sole owner of the name and in so doing it had started to "elbow out " Robert from "some of the value of the name [which]… blurs or diminishes Robert’s rights".
Having found the necessary ingredients for passing off the judge granted an injunction in the terms sought.
Comment
This appears to be the first reported English case where a business that shares the goodwill in a name has been successful in claiming passing off against the other joint owner. It is also one of a handful of recent cases where dilution or diminishment of the value of goodwill of itself has been accepted as sufficient damage to establish such an action.
There is a rather more established history of passing off cases in the English courts where damage has been established on the basis of injurious association or tarnishing. However interestingly here despite an implicit finding that such damage was less than "probable", as it was more than "fanciful" and amounted to "a real possibility" the judge felt it sufficient to "count as damage for the purposes of passing off". This part of the judgment may be challenged. It may be that the accepted test in Erven Warnink BV v J Townend & Sons (Hull) Ltd that the claimant was "really likely" to suffer damage to its goodwill requires a higher threshold of probability.
As this case illustrates businesses considering undertaking a re-branding exercise need to be wary. Thousands of pounds can be invested when re-branding, only to discover that another can prevent you from benefiting from your investment. It is therefore always advisable to take legal advice before embarking on such an exercise.
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