Redwood Tree Services Ltd has succeeded in a passing off action in the Patents County Court against a business trading under the name “Redwood Tree Surgeons”. Both parties were small local tree-surgery businesses. (Redwood Tree Services Ltd v Warren Apsey t/a Redwood Tree Surgeons  EWPCC 14, 13 May 2011.)
Redwood Tree Services Ltd, the claimant, has succeeded in a passing off action in the Patents County Court against a business trading under the name “Redwood Tree Surgeons”. Both parties were small local tree-surgery businesses, based about ten miles apart. The judge held that the claimant’s tree-surgery business had a small goodwill, highly localised in the Guildford area, which had continued despite different owners. Although the two businesses had co-existed for over six years, he found that there was the requisite misrepresentation when the defendant traded in the claimant’s area, although most of the time he did not. The judge held that this was the kind of case in which damage followed if goodwill and misrepresentation were established. The judge considered that he could not stop the defendant trading under the name “Redwood Tree Surgeons” within the RG postcode area; consequently, the only injunction which would be appropriate was one specifically limited to the GU, SL and possibly KT postcodes areas. This case illustrates how passing off can apply to small localised businesses and how in practice the terms of an injunction can be tailored to deal with passing off in such situations. (Redwood Tree Services Ltd v Warren Apsey t/a Redwood Tree Surgeons  EWPCC 14, 13 May 2011.)
The elements of the tort of passing off, as described by Lord Oliver in the Jif Lemon case (Reckitt & Coleman Products Ltd v Borden Inc  RPC 341), are as follows:
- Goodwill or reputation attached to the relevant goods or services.
- Misrepresentation by the defendant to the public (whether or not intentional) leading, or likely to lead, the public to believe that the goods or services offered by him are the goods or services of the claimant.
- Damage to the claimant, by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the claimant.
Redwood Tree Services Ltd, the claimant, was a tree-surgery and forestry business based in Bisley in Surrey, which traded as “Redwood Tree Services”.
The business was begun by Jonathan Hobbs in 1986, and in 2000 he sold it to Nick Rose. In 2004, Mr Rose transferred the business to Tina James and her daughter, Keleigh James, who incorporated the company. Mr Rose continued to work for the business. (Miss James later left the business and from then on Mrs James owned 100% of it, and was the sole director and company secretary.) In 2006, its turnover was about £89,000.
Warren Apsey, the defendant, was an individual trading as “Redwood Tree Surgeons”, whose business was also that of tree surgery. He started the business in 2004, based in Eversley in Hampshire, ten miles from Bisley. He claimed that when he set up his business he had not heard of the claimant’s business. In 2010, its turnover was about £93,000.
In October 2005, the claimant first complained that Mr Apsey was passing off his business as the claimant’s. However, the action the claimant begun in Basingstoke County Court was later struck out due to its failure to provide security for costs. In September 2009, the claimant began proceedings in the Patents County Court.
Mr Apsey denied passing off and raised two principal points:
- He challenged the history of the claimant’s business, particularly for 2004, arguing that it was not clear that much was happening in that year. There were no accounts for 2004, although there were for the years on either side.
- He relied upon the fact that the businesses had traded side by side since 2004 and claimed that there had been no evidence of any significant confusion during that time.
HHJ Birss QC held that Mr Apsey was passing off his business as the claimant’s, although its rights were local and confined to a particular area around Guildford.
The following is a summary of his reasoning.
The judge said that it was clear from the evidence that the claimant’s business continued in 2004 once it was bought by Mr Rose. It was not clear to what extent the turnover was attributable to trading under the name “Redwood Tree Services” as Mr Rose also used the name of his previous business, “Forestry Advisory Services”, but it was clear that it was being used as at least one of the names of his business.
The judge rejected Mr Apsey’s argument that there was no goodwill in the claimant’s business in 2004, finding that there was an existing goodwill and reputation associated with the name “Redwood Tree Services”. Invoices showed that work was still being done in 2004 and the judge concluded that as a fact the business continued throughout that period. He held that the tree-surgery business had a small goodwill, highly localised in the Guildford area, which he commented was at the lower limit of the difference between trivial and small (applying Sutherland v V2 Music  EMLR 28).
The judge said that the date on which the claimant was incorporated and the business transferred to it in 2004 was not central to the issues.
He found that both the parties’ tree-surgery businesses were highly localised. The two businesses were of roughly comparable size and were very close, with the M3 motorway dividing them. The judge said that it was clear from the internet that there were numerous businesses using the name “Redwood”, including one selling forestry equipment based 15 miles from the claimant. He rejected the argument that the word “redwood” was inherently descriptive of a tree-surgery business.
The judge explained that the principal issue in relation to misrepresentation was the parties’ six and a half years of parallel trading.
The names of the parties’ businesses were virtually identical. The judge said that the key to the case was the juxtaposition of the name and the location. The name “Redwood” or “Redwood Tree Services” was not distinctive of the claimant when considering for example, the public in Central London. However, the claimant did have a goodwill in its local area around Guildford which broadly corresponded to the GU and SL postcodes. He emphasised that small businesses were entitled to as much protection as anyone else.
The judge held that if Mr Apsey traded in the claimant’s home area he made a misrepresentation; the use of the name “Redwood Tree Surgeons” in the relevant area, whether intentional or not, lead or was likely to lead the public to believe that goods or services offered by his business were those of the claimant’s business. He added that it was clear that when Mr Apsey used his trading name away from the claimant’s area, which was what he did most of the time, there was no misrepresentation. Mr Apsey’s home area was in Eversley and elsewhere within the RG postcode area.
The judge then considered whether Mr Apsey had ever traded in the claimant’s area such as to have committed an act of passing off and found that he had, for example, when he was working in Chobham. The judge said that putting an advertisement for “Redwood Tree Surgeons” in a Guildford area directory was also an act of passing off.
According to the judge, there were a number of reasons why there was little evidence of actual confusion:
- Mr Apsey was not passing off very much at all.
- The businesses were very small and the numbers therefore proportionally smaller.
- They were the sorts of businesses where confusion and deception would not often come to light.
The judge held that this was the kind of case in which damage followed if goodwill and misrepresentation were established. The nature of the misrepresentation diluted the distinctive ability of the goodwill and reputation to attract custom. It was irrelevant therefore that there was no evidence of actual diversion of customers.
Conclusion – relief
As the claimant’s rights were local, the judge considered that it could not stop Mr Apsey trading under the name “Redwood Tree Surgeons” within the RG postcode area. Consequently, the only injunction which would be appropriate was one specifically limited to the GU, SL and possibly KT postcodes areas.
The judge stressed that he did not accept that the claimant had the unfettered right to require Mr Apsey to take down his website; looking at it nationally, the claimant had no better right to the website using a domain name with the words “Redwood Trees” than him. The judge said that provided Mr Apsey’s website made it clear that it was not based and did not trade in GU or SL postcode areas, he would not grant an injunction which prohibited such a website. The judge said it would not be appropriate for Mr Apsey’s website to include a reference to the claimant’s business (to indicate effectively that the area in which he did not trade was the claimant’s area); this would be a recipe for further confusion.
It was appropriate in this case for Mr Apsey’s website to include, for a limited period of time only, a reference to this judgment. After further submissions from the parties, the judge held that said this should be for six months only.
The judge was not satisfied that this was an appropriate case for an inquiry into damages as the claimant had not shown on the evidence that it was losing business in a substantial way. However, he agreed that the claimant could make an application for an inquiry.
This case illustrates how passing off can apply to small localised businesses. As the judge emphasised, passing off will protect goodwill on a relatively small scale, provided that it is more than trivial; here the claimant was apparently at the lower limit of the difference between trivial and small.
It is interesting to see how in practice the terms of an injunction can be tailored to deal with passing off between small localised businesses. By limiting the terms of the injunction to particular postcode areas, Mr Apsey can continue his tree-surgery business under the name “Redwood Tree Surgeons” in most of the places he has been operating since 2004, without affecting the claimant’s business. However, this could inhibit any future plans he may have for expanding the business geographically.
The way in which the judge has dealt with Mr Apsey’s website is similarly pragmatic in relation to localised goodwill. In view of the nature of the claimant’s goodwill and customer-base, requiring Mr Apsey to put a prominent notice on his website making it clear that he does not trade in certain postcode areas is a common-sense approach.
Practical Law IP/IT Update 03.06.2011