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.