In Stone v Wenman,(1) the Intellectual Property Enterprise Court (part of the High Court) was asked to decide when the extent of the use of a sign will be sufficient to generate goodwill for the purposes of bringing a claim in passing off.
This was a dispute between two spiritual and holistic therapists concerning the sign ARCHANGEL ALCHEMY used by both parties to sell spiritual coaching and education courses with the aim of connecting participants with archangels.
The claimant (Stone) owned a UK trademark registration for the word mark ARCHANGEL ALCHEMY registered in October 2019 for "training course – for soul development – yogic sciences – quantum physics – altered states of awareness – relaxation – holistic health – celestial beings – natural living" in class 41 (the trademark).(2)
In late 2019, Stone began marketing an online course under the trademark. At around the same time, the defendant (Wenman) also began marketing an online course using the sign "Archangel Alchemy". Stone issued trademark infringement proceedings under sections 10(1) and 10(2) of the Trade Marks Act 1994 (TMA), claiming that Wenman was using a sign identical to the trademark in relation to identical services, or alternatively, to the extent that the services were not identical, that Wenman was using an identical sign for similar services, creating a likelihood of confusion on the part of the public between Stone and Wenman and their services, including the likelihood of association.
By way of defence, Wenman argued that she had been offering her spiritual and holistic services under the Archangel Alchemy sign since 2010. She claimed that, as a result, she had accrued goodwill in the sign in relation to her services, which pre-dated the registration of the trademark. She denied trademark infringement, counterclaiming for a declaration of invalidity of the trademark pursuant to section 5(4) of the TMA. This section of the TMA provides that a trademark shall not be registered if its use in the United Kingdom is liable to be prevented by any rule of law, including the law of passing off. Wenman also counterclaimed for passing off.
The dispute boiled down, therefore, to questions of passing off. In particular, could Wenman show sufficient goodwill in the Archangel Alchemy sign to succeed both in invalidating the trademark and in the counterclaim against Stone?
The judge began by confirming that the elements necessary to reach a finding of passing off are the "classical trinity" of goodwill, misrepresentation leading to deception or likelihood of deception, and damage flowing from the misrepresentation.(3) Referring to the decision of the Supreme Court in Starbucks,(4) she accepted that Wenman had to establish her claim in passing off "as at the inception of the use complained of".(5) In other words, Wenman had to show that she had sufficient goodwill in the Archangel Alchemy sign on the date on which Stone began marketing her online course. The judge was satisfied on the evidence that this was 7 September 2019. She acknowledged that Wenman had begun providing her services under the Archangel Alchemy sign prior to this date but embarked on an assessment of whether this use was on a sufficient scale to generate goodwill for the purposes of passing off.
That raised the legal question of the level of goodwill required to sustain a claim in passing off. The Court considered the relevant authorities.(6) It was apparent from those that actual goodwill in the relevant jurisdiction was needed and that this involved the presence of clients or customers in that jurisdiction for the products or services in question.(7) A "reputation on a relatively small scale"(8) would still attract the protection of a claim in passing off, although a de minimis level applied such that "a claim in passing off cannot be sustained to protect goodwill which any reasonable person would consider to be trivial".(9)
The Court reviewed Wenman's evidence of use of the Archangel Alchemy sign, which included use in relation to magazine columns, workshops and courses, exhibitions, podcasts and YouTube videos and (to a more limited extent) on Wenman's website. In response to specific arguments advanced by Stone, the Court confirmed that it was satisfied in particular:
on the balance of probabilities that the [magazine] columns contributed to Wenman's reputation as The Archangel Alchemist who carried out Archangel Alchemy, and this was a springboard from which she grew her own business.(10)
The Court also found witness evidence adduced by Wenman "valuable"(11) as demonstrating that customers perceived the Archangel Alchemy sign as synonymous with her and her services.
Based on the evidence, the Court held that Wenman's services "carried on under and/or by reference to the [Archangel Alchemy sign] prior to 7 September 2019 were sufficient to generate goodwill in [that sign] as at that date".(12) The Court went on to hold that Stone's use of the trademark amounted to a misrepresentation. Use of the trademark was liable to (mis)represent to the relevant public that Stone was, or was commercially connected to, Wenman. Unfortunately for Stone, the Court partly based this finding on evidence that Stone herself had submitted in support of her trademark infringement claim. In her witness statement, Stone had asserted that there would be confusion in the market because of the identicality of the signs and services. She had also said that any confusion would work in both directions in that customers looking for Stone's services might find Wenman's services and be confused, and vice versa. This was enough for the Court to be satisfied that Stone's use of the trademark amounted to a misrepresentation.
The Court's findings on goodwill and misrepresentation in favour of Wenman signalled the end of the road for Stone. She had acknowledged at the outset of the trial that if the Court found against her on these issues she would admit that Wenman would suffer damage and that the trademark was invalid under section 5(4) of the TMA. Therefore, the Court did not need to consider these issues further.
At first glance, this appears to be a straightforward passing off action. However, elements of this case are noteworthy.
First, the market concerned was highly unusual. It was both limited in scope and niche. As a result, Stone ran a novel argument that, considered in this context, Wenman was using "Archangel Alchemy" not as a brand or indicator of origin but as a "descriptor of herself and the techniques she used".(13) It was, Stone argued, merely "figurative or poetic language common to . . . the field"(14) and incapable of generating goodwill. The Court did not, however, accept this submission, holding that Archangel Alchemy was not a descriptor but a brand used by Wenman to promote herself and her events. Stone also rather destroyed her own argument by including evidence in her witness statement that she herself had chosen "Archangel Alchemy" because she had wanted a brand that would stand out and be noticed by customers. The Court refused to allow Stone to have it both ways.
Second, in a related argument, Stone claimed that Wenman did not use the Archangel Alchemy sign alone but usually combined it with her name. Stone argued that this combined sign was Wenman's main brand and that Archangel Alchemy was a mere subsidiary brand, the use of which was not capable of giving rise to goodwill. Instead, any goodwill attached to the use of Wenman's own name. The Court also rejected this argument, holding that it was "very common to have subsidiary brands to an overarching brand"(15) and that there was no doubt that Wenman's customers saw both her name and the Archangel Alchemy sign as indicators of origin when they were used together.
Finally, Wenman had acknowledged in oral evidence that around 15%–25% of her work related to "Archangel Alchemy". The Court held that:
even if she is exaggerating and only 5% or 1% of that work is attributable to Archangel Alchemy . . . in my judgment that is more than trivial and has generated sufficient actual goodwill to be capable of damage by reason of a misrepresentation.(16)
This indicates that quantification of use of a sign to demonstrate generation of goodwill can be helpful but only to a limited extent. It will, instead, be actual evidence of use in the relevant context that will be determinative.
For further information on this topic please contact Gill Dennis at Pinsent Masons by telephone (+44 20 7418 8250) or email ([email protected]). The Pinsent Masons website can be accessed at www.pinsentmasons.com.
Endnotes
(3) As described by Lord Oliver in the Jif Lemon case (Reckitt & Colman Product v Borden [1990] 1 WLR 491 HL, [1990] RPC 341, HL).
(4) Starbucks (HK) Limited v British Sky Broadcasting Group PLC [2015] 1 WLR 2628.
(6) [2021] EWHC 2546 (IPEC) at paragraphs 31 to 33.
(7) Starbucks at paragraph 47.
(8) [2021] EWHC 2546 (IPEC) at paragraph 33.
(9) Ibid, quoting David Richards J in Knight v Beyond Properties Pty Ltd [2007] FSR 34.
(10) [2021] EWHC 2546 (IPEC) at paragraph 56(i).