In an English court case between two similar businesses with very
similar names, TeleWorks Ltd. lost its argument against TeleWork
Group PLC because it could not show that it had an established
reputation at the time its rival began trading. Its prediction of
future goodwill was not considered relevant.
TeleWorks sued TeleWork Group for what is known as “passing
off.” Where a business is concerned that a competitor is deceiving
the public by using the same or a similar trading name or brand, an
action for trade mark infringement and passing off often follows.
If there is no registered trade mark, the action is likely to be
just for passing off.
For an action of passing off to succeed, the aggrieved business
must show, principally, a misrepresentation made by another
business to its potential customers which could damage its
goodwill.
TeleWorks supplied networks and internet services. Telework
Group, formed in July 2000, was due to launch a new software
product called “TeleWork” when Teleworks sued. Teleworks said it
had establised reputation in the name, such that customers of the
new product were likely to falsely think that TeleWork Group plc
and its software were the same as those of TeleWorks, or at least
that the businesses were connected. Telework Group argued that the
product differed from anything offered by TeleWorks.
The court said that TeleWorks had to prove its reputation at the
time of TeleWork Group beginning the activities complained of.
TeleWorks tried to argue that the product would damage its future
goodwill; but the court said that the concept of future goodwill
was not helpful and was not necessary to protect the legitimate and
logical expansion of a growing business. The crucial point was
whether customers would be misled.
The court looked at the reputation of TeleWorks and took the
view that, if it was strong enough at the relevant time, its
goodwill could be protected in fields in which it had not yet
entered and “which it might not have the slightest intention of
entering.” However, if its reputation at that time was inadequate
to make people think the goods of the two rivals were connected,
"then that was the end of the matter". It was not right, said the
court, to go on to consider evidence of future developments of
TeleWorks’ business in order to bolster that reputation.
The court concluded that there was no actual or threatened
misrepresentation, no evidence of actual deception, and that the
strong descriptive element in the name was an important factor in
considering the likelihood of confusion.
