Most businesses invest a lot of time and money in creating a brand that will appeal to consumers and distinguish its products or services from those of its competitors.
As with all industries, companies and professional individuals looking at the property industry will go to a company’s website as their first port of call.
Anyone in the property industry needs to look carefully at how they promote themselves online and will want to prevent others both from damaging and “piggy-backing” on their reputation.
The best way to do this will be to register the brand as a trade mark, but where this has not been done, professionals need to rely on the law against passing off.
What protection is afforded by this law? And what steps can businesses take in response to cybersquatting, typosquatting and gripe sites?
Passing off
The key elements of the tort of passing off were established in Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341. A claimant must establish the existence of:
? goodwill or a reputation attached to the claimant’s goods or services;
? a misrepresentation by the defendant to the public that is likely to lead the public to believe that the defendant’s goods or services are the claimant’s; and
? damage to the claimant caused by this misrepresentation.
It does not matter whether the misrepresentation is intentional, nor whether the parties are direct competitors. Not all customers or potential customers, or even a majority of them, have to be confused. Market conditions may make confusion more likely.
For instance, in the successful passing off action of Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2009] EWHC 3032 (Ch), the claimants operated the famous Hotel Cipriani in Venice and the defendants established a successful London restaurant under the name Cipriani London, which some guidebooks listed as “Cipriani”. Although the claimants operated in Italy, it was sufficient for the purposes of goodwill that they had ultimate consumers in the UK. The court decided that use of the names Cipriani and Cipriani London was likely to mislead a substantial number of members of the public into believing that the restaurant was connected with the claimants’ hotel. The claimants were only able to show one instance of actual confusion (although more examples were exposed as the case progressed), but the court stated that it would be difficult for more instances to come to their attention in Venice.
Typical heads of damage in passing off actions are lost sales and reputational damage. Claimants cannot prove damage if they have “abandoned” a business and its associated goodwill (Sutherland v V2 Music Ltd [2002] EMLR 28), as then there is nothing left to damage. Therefore, when transferring a property, be sure to consider whether there is a brand attached to the building/business that you want to retain.
Remedies for claimants who win passing off cases at trial include damages or an account of profits in addition to an injunction, and delivery up or destruction of infringing goods. Interim remedies, such as injunctions or search and seizure orders over infringing articles, are sometimes granted. However, claimants may not receive interim relief if their aim is to stifle competition. In Nationwide Building Society v Nationwide Estate Agents Ltd and another [1987] FSR 579, the claimant sought an interim injunction restraining the defendants from using the name “Nationwide” for its estate agency business. Interestingly, the court held that although Nationwide Building Society did not have existing goodwill in estate agency, it was still at risk of being associated with the defendant in this field, as estate agency and building societies were both closely connected with buying and selling houses. However, the interim injunction was refused, because the evidence suggested that the claimant had “gone ahead as fast as possible” to build its rival estate agency business under the name “Nationwide Estate Agency Ltd” merely to prevent the defendant from competing in this field.
As shown by Cipriani and Nationwide, similar trading names are often the source of passing off actions. In Fine & Country Ltd and others v Okotoks Ltd and others [2012] EWHC 2230 (Ch), use of the word “Fine” for estate agent services was held to constitute passing off. The claimants provided services to estate agents under the name “Fine & Country”, while the defendants operated estate agencies, some under the name “Fine”. Although the claimants’ licensees rather than the claimants themselves used the “Fine” name, this did not prevent the claimants from succeeding at trial. The fact that they were able to charge significant licence fees showed that their own services and brand generated goodwill.
The way that defendants build their “offending” brands is important, as it is often difficult to find convincing evidence of the public being misled in passing off cases. However, in this case the defendants had used very similar logos and names to the claimants’, and there were numerous instances of confusion among prospective buyers and sellers. This case is now subject to appeal.
Domain names: cybersquatting and typosquatting
Intellectual property law, in particular, faces the challenge of adapting to new online practices, which are not adequately covered by legislation. An example is “cybersquatting”, the practice of registering a domain name that is similar to the name of an established trader, usually to hold the domain name to ransom and/or profit from the fact that it drives customers or potential customers to that website. Case law has been instrumental in this area.
The leading case on cybersquatting is British Telecommunications plc v One in a Million Ltd and others [1999] 1 WLR 903. The defendants registered the names of several well-known companies (BT, Virgin, Sainsbury’s, Marks & Spencer and Ladbroke Group) within domain names such as “marksandspencer.com” and “virgin.org” without their consent. The court held that these domain names were “instruments of fraud”, despite the websites being inactive. There was clear evidence that by registering these distinctive names, the defendants were falsely representing that they were associated with these companies; “whois” searches would have established the defendants as the registrants, giving the impression that the parties were connected.
Following One in a Million, defendants who register domain names similar to famous names without a legitimate reason are vulnerable in passing off actions, subject to their intentions and timing. In this case, the defendants had previously registered “burgerking.co.uk” and offered to sell it to Burger King for £25,000, plus VAT. If a new company name is announced post-merger and another party immediately registers it as a domain name, this could also imply bad faith.
“Typosquatting” is the practice of registering domain names containing a well-known name slightly altered by typos. The established company is likely to want to redirect traffic from “typo” domain names to its website. The typosquatter may try to charge a fee for this redirection.
In Phones 4U Ltd and another v Phone4u.co.uk Internet Ltd and others [2006] EWCA Civ 244, the claimants owned and operated the Phones4U retail chain and registered the domain name “phones4u.co.uk”. The defendants registered “phone4u.co.uk”. The second defendant offered to sell this domain name, saying (untruthfully) that a third party had offered £100,000 for it. This passing off claim was successful. The court held that the defendants, who had never advertised under the name phone4u, had no intention of legitimately trading under their domain name. In addition, the public was likely to be misled; shortly before trial, the defendants disclosed emails from confused members of the public who had mistakenly contacted the defendants due to their domain name.
Property professionals who consider themselves victims of domain name passing off should prioritise the domain names most likely to be associated with their brand. Cybersquatters and typosquatters exploit the “first come, first served” nature of domain name registration and the relatively cheap registration process. To guard against these practices:
? register your chosen domain names as early as possible;
? consider registering “typo” versions and different permutations;
? ensure that one company within a corporate group takes responsibility for renewals;
? regularly monitor whether any similar domain names have been registered;
? monitor registration dates; register relevant domain names if the previous owner lets registration lapse;
? consider negotiating: if the owner registered the domain name in good faith, they might include a link redirecting traffic to your site, or display a disclaimer on their site stating that it is unconnected with your business, for a fee; and
? consider registering domain names or brands as trade marks. Before registration, conduct searches to ensure that the domain names or brands will not infringe existing marks, to avoid trademark proprietors in a similar field obtaining a transfer of your domain name or starting infringement proceedings.
Gripe sites
Property professionals may encounter “gripe sites”: websites set up to air grievances about a business or individual. Sussex Heights (Brighton) Ltd v Tom Coady [2012] EWPCC 36 involved gripe sites established by a tenant and residents’ association chairman, at “sussexheightsresidentsassociation.org.uk” and “sussexheights.org”. The claimant, Sussex Heights’ management company, complained that these domain names misrepresented that these were “official” sites for the building. The judge found that the real problem was that the claimant disliked the negative discussions of Sussex Heights. The law of passing off could not assist with this disapproval; the judge refused to transfer ownership of the websites to the claimant.
Gripe sites’ domain names often include a pejorative term, such as “natwestsucks.com”. Although the public may not connect such websites with the company in question, passing off claims may be possible for companies with overseas operations as foreign internet users may not understand pejorative terms.
Legitimate grievances can be defended if those complaining are not seeking commercial gain. In the 2003 arbitration case of ECG European City Guide v Jules Woodell (claim number: FA0308000183897), the respondent registered “stopecg.org”. The panel refused to order a transfer, holding that the respondent legitimately registered this domain name to provide a forum for criticism of ECG. Importantly, the website contained a disclaimer indicating that it was a non-commercial site established in opposition to ECG, which the panel held would alleviate confusion.
Tenants’ associations looking to air grievances online should take care when choosing domain names and avoid using language on their site that would mislead the public as to the website’s origin; a disclaimer may be useful. Property professionals seeking to minimise the reputational damage caused by gripe sites should keep in mind the further reputational damage associated with legal action.
Know your rights
The law of passing off can provide a number of useful remedies across a variety of situations and so even where you do not own a trade mark for a brand, that does not mean you do not have rights.
Iain Connor is a partner and Leila Panesar is a solicitor in the intellectual property team at Pinsent Masons LLP
