In Redwood Tree Services Ltd v Warren Apsey t/a Redwood Tree Surgeons  EWPCC 14 (13 May 2011) it was found that a small business with highly localised goodwill could succeed in a claim for passing off against a business with a similar name located 10 miles away that traded in part in the same catchment area if there was the requisite misrepresentation. Unlike the national protection offered by a registered trade mark, the protection of goodwill against passing off is limited in scope to the geographical area common to both businesses.
The Claimant, Redwood Tree Services Ltd, was a tree surgery and forestry business based in Bisley, Surrey since 1986. In 2003, it registered the domain name redwoodtreeservices.co.uk and the name went live in January 2004. Around this period, the company was experiencing fluctuations in turnover following the sale of the business to new owners, but profits had later picked up again. It was during this fluctuation period in 2004 that the Defendant, Warren Apsey, started running a tree surgery business, trading as Redwood Tree Surgeons, in Hampshire, 10 miles from Bisley. Mr Apsey later registered the domain name redwoodtrees.co.uk . Based on turnover, the businesses were of comparable size.
The Claimant first complained in 2005 and launched an action in 2007, but due to funding difficulties the proceedings had not taken off until April 2010. The Defendant argued that when he started his business, the Claimant’s business had stalled and that in any event the two businesses had been trading side by side for six and a half years without any confusion.
HHJ Birss QC, sitting in the Patents County Court, stated the classic trinity of passing off: the existence of goodwill or reputation in relevant goods and services, a misrepresentation by a trader in the course of trade, and the likelihood of damage or loss as resulting from this misrepresentation.
He noted that there were several other businesses using the name “redwood” but based on the evidence, the judge found that despite the businesses in question being highly localised there was enough goodwill for a passing off action.
The judge acknowledged that the businesses had been trading in parallel in the same area for over six years with essentially identical names, but the critical date was 2004, the date the Defendant started the behaviour complained of. It was noted that although there was a strong inference that there was no deception where the parties co-existed without instances of deception coming to light, non-deception could not necessarily be inferred from this. The judge stressed that actual deception was not required, but rather the likelihood of it, even where there was no actual diversion of trade. From the evidence presented, the judge held that if the Defendant traded in the same area as the Claimant using the name “Redwood Tree Surgeons”, the public was likely to think that the two businesses were connected, although using the same name away from the Claimant’s catchment area would not amount to a misrepresentation.
There was some overlap in the areas in which the parties traded. Given the size of the businesses, the subsequent customer base, and the goodwill the Claimant had in the goods and services in question, it was held that there was a misrepresentation by the Defendant and that placing an advert in the same directory as the Claimant was an act of passing off. The judge concluded that the likelihood of damage was therefore automatic and it was immaterial whether there had been any actual loss to the Claimant’s business.
HHJ Birss QC granted an injunction limiting the Defendant to trading with the name within specified post code areas that the Claimant did not cover. The judge did not go so far as to require the Defendant to take down his website, but stated that certain measures had to be put in place to ensure that the Defendant did not trade in or advertise to trade in the Claimant’s area. No damages were awarded as there was no evidence of actual loss to the Claimant.
This case shows that small localised businesses may not be able to completely stop competitors using virtually identical names, but they may be able to get the court to delineate trading areas by way of an injunction to deal with the passing off. It also highlights the benefits of registered trade marks that grant UKwide protection over a reliance on the law of passing off that requires an establishment of goodwill, which for a small business, may be limited to a small area.