Media Agency Group Ltd & Anor v Space Media Agency Ltd & Ors

This is an appeal from the decision of HHJ Hodge QC sitting as a judge of the High Court in Manchester dated 18 April 2018 and its consequent order dated 25 April 2018, by which he upheld a claim based amongst other things on passing off against a company, Space Media Agency Limited ("SMA") and two individuals, Mr Faraz Shafiq and Mr Mohammed Buksh ("Mr Shafiq" and "Mr Buksh"), who between them owned all its shares. The appeal is brought only by Mr Buksh, whose case is that the judge's findings which underpinned his decision on the passing off claim against him and the other defendants were not open to the judge. His co-defendants, SMA and Mr Shafiq, have not appealed. SMA is apparently no longer trading. On the appeal there was no appearance from the respondents for reasons related to unrecovered costs from the proceedings below.

The judgment would have benefitted from a short exposition of the facts and the nature of each of the respondents' claims. What follows is my synthesis of the facts which are relevant to the passing off claim against the third defendant and appellant derived from the papers. The first claimant and respondent, Media Agency Group Limited ("MAG"), was incorporated on 17 September 2009. It carries on business as an advertising agency and more particularly as an independent media planning and buying specialist which delivers integrated advertising campaigns. At the date of its incorporation, its name was Transport Media Limited. The second claimant and respondent, Transport Media Limited ("TML"), was incorporated on 7 February 2012. At that point it had the name Agency Media Group Limited. The name was changed to Media Agency Group

SMA was incorporated on 10 October 2016 with Mr Shafiq as its sole director and Mr Shafiq and Mr Buksh as its sole shareholders. It holds itself out as an independent advertising agency. At some point thereafter MAG discovered that SMA was using the trading style "Transport Media Agency" and that Mr Buksh had acquired the internet domain name www.transportmwediaagency.co.uk. In 2014 MAG applied for and were granted a registered trademark, "Traccountable". The mark was said to be registered for a product which was under development for outdoor media. It is not suggested that any sales had been made by MAG under that mark prior to the commencement of the proceedings. Amongst the domain names registered by Mr Buksh was www.trackaccountableadvertising.com.

Because it is said that the judge was not entitled to find that MAG as opposed to TML owned the goodwill in the trading style "Transport Media", I must set out the way in which the case in passing off was pleaded. In the re-amended Particulars of Claim, MAG is referred to as Media Agency Group and TML as Transport Media. The relevant parts of the pleading are as follows:

“1.

This is a claim for relief arising out of the misuse by the 1^st and 2^nd Defendants of confidential information having the character of trade secrets and belonging to the 1^st Claimant (“Media Agency Group”) and out of the passing off by the 1^st, 2^nd and 3^rd Defendants of the business of the 1^st Defendant (“Space Media Agency”) as the business of the Claimants.

2.

Media Agency Group was incorporated on 17 September 2009 and carries on business as an advertising agency. More particularly, it is an independent media planning and buying specialist which delivers and integrates advertising campaigns. Its main place of business is Lowry Plaza, Salford Quays.

3.

The 2^nd Claimant (“Transport Media”) was incorportaed on 7 February 2012 and is one of several connected companies within the Media Agency Group (“the Group”).

4.

The names of the connected companies are descriptive of the various advertising media which are used in the business and their purpose is to drive relevant business to Media Agency Group.

…

58.

Transport Medcia was incorporated on 7 February 2012 and renamed on 20 February 2013 to be descriptive of a service provided by Media Agency Group, namely advertising on modes of transport such as buses, trains and the underground.

59.

Transport Media is associated with the internet domain www.transportmedia.co.uk

60.

Notwithstanding that there are circa 9,000 advertising agencies based in the United Kingdom (and for reasons set out in the confidential information) it is believed that there is not a single other agency which incorporates the words “Transport” and “Media” in any trading style or title or internet domain name.

61.

For that reason (and for the reasons set out in Schedule 1) Transport Media has acquired a reputation (substantial goodwill) in the provision of advertising on modes of transport and is associated with the internet domain www.transportmedia.co.uk.

62.

Space Media Agency and/or Mr Shafiq have adopted the trading style “Transport Media Agency” and Mr Buksh has acquired the internet domain www.transportmediaagency.co.ukand they have each used them to promote the business of Space Media Agency.

63.

Space Media Agency and Mr Shafiq and Mr Buksh have thereby made (and are continuing to make) a material and false representation to prospective customers leading to confusion or a deception that the services provided under the style or title of “Transport Media Agency” are the services of Transport Media and/or Media Agency Group.

The pleading then goes on to allege that each of TML and MAG is entitled to an injunction restraining the use of the trading styles "Transport Media Agency" and "Traccountable", the internet domain www.transportmediaagency.co.ukand any domain containing the invented word "traccountable" or similarly deceptive trading styles or titles. The prayer for relief for these injunctions is made on behalf of MAG and/or TML in contrast to the prayer for relief for breach of confidence which is brought in the name of MAG alone. The schedule to the Particulars of Claim is broadly concerned with the breach of confidence action but contains some details of the way in which the claimants were said to do business. Thus it is said in part 1 of the schedule:

Turning to the defence, paragraph 40 of the defence of all three defendants denied that TML can have acquired a reputation and all goodwill in the provision of advertising in modes of transport or being associated with the website in any meaningful way, since it was a dormant company until April 2017. It continued:

Paragraph 41 goes on to say that:

Paragraph 25(2) of the reply accepted that TML had always been dormant. Paragraph

The evidence of Mr Cairney (who is described as a consultant to MAG), which relates to the passing off claim, was contained in the following paragraphs:

Mr Kehoe, the chief executive officer of MAG, says at paragraphs 7 to 10:

Finally from the evidence, Mr Cairney's second witness statement says at paragraph 5:

At paragraph 4 of his judgment, the judge makes a finding that MAG trades under various names, including the name "Transport Media". MAG is said to be a very successful business with a turnover for 2016 in the sum of £9.8 million. At paragraph 9 the judge records that counsel for the claimants had accepted during the course of the trial that any goodwill in the names Transport Media and the product "Traccountable" was held by MAG and not TML. No relief could be granted in favour of TML, which the judge said “now passes out of the picture”. At paragraph 125 the judge recorded (without necessarily accepting) some evidence of Mr Buksh:

Then the judge made this finding:

And then he goes on to deal with an issue in relation to service.

At paragraph 128 the judge says:

And at paragraphs 194 to 196, the judge directs himself on the law of passing off by reference to the well-known judgment of Lord Oliver in the Jif Lemon case, Reckitt and Coleman Properties Ltd v Borden Inc [1990] 1 WLR 491, and as to other aspects of the law of passing off by reference to Phones4u Ltd & Anor v. Phone4u.co.uk Internet Ltd & Ors [2006] EWCA Civ 244. At paragraph 197 the judge says he was satisfied by reliance on British Telecommunications plc v One in a Million Ltd and Others [1999] 1 WLR 903 "that registration of a domain name is capable of amounting to an actionable passing off".

At paragraph 198 the judge recorded the submissions of counsel then appearing for the claimants, all of which he accepted. These included:

At paragraph 200 the judge deals with the defendant's point that TML could not have acquired any goodwill as a dormant company. He records and accepts counsel for the claimant's submission that the defendant's case on goodwill was plainly wrong. The judgment does not contain much further analysis of the way in which MAG acquired the relevant goodwill.

Turning to the case on passing off based on Traccountable, the judge accepted submissions of the claimant's counsel along the following lines. Paragraph 65 of the amended Particulars of Claim (which I have set out above) had not been denied by the defendants, who in paragraph 44 of the defence had simply required the claimants to prove that allegation. However, CPR 16.5(1)(b) required a party to state which of his opponent's allegations he was unable to admit or deny and which he required the claimants to prove. As the contents of paragraph 65 were matters which the defendants were able to admit or deny, the claimants did not have to prove them. On that basis, the judge held that the passing off claim based on both Transport Media and the "Traccountable" word were made out.

These are in summary:

It was not open to the judge to find that MAG succeeded in its claim to passing off,

The judge failed to deal with the defence that the domain name was descriptive.

The judge's finding of passing off based on the "Traccountable" name was wrongly made on the basis of CPR 16.5(1)(b) rather than on the evidence. Further, the trademark was owned by TML.

Mr Clark, who appeared on behalf of the appellant, submitted that in upholding the claim to passing off based on the ownership of goodwill by MAG the judge gave judgment on a basis which was both unpleaded and inconsistent with MAG's pleaded case in its amended Particulars of Claim. If paragraph 25 of the reply was asserting that MAG as opposed to TML had acquired the goodwill, that could not rectify the position because it was inconsistent with the claim raised in the Particulars of Claim and was not permitted by CPR 16 PD 9.2. Mr Clark went on to say that if an amendment had been applied for at trial to allege that the relevant goodwill was owned by MAG, his client would have been able to object to it as an amendment made too late and which fundamentally altered the case. Furthermore, if it had been allowed he would have

Finally, the judge had been wrong, said Mr Clark, to rely on the attraction by MAG of significant business through a website with the name "Transportmedia". The website in question had the company registration number of TML, and the association between the website and TML was acknowledged by the respondents in their amended Particulars of Claim. Moreover, the respondents' case as advanced in the pleadings was not that MAG traded under the name "Transport Media" but that it benefitted from business generated by and driven to it by TML. That arrangement would not have generated for MAG a proprietary interest in any goodwill.

I am not able to accept any of these arguments. First, so far as the pleadings are concerned, it was clear from the outset that the passing off claim was brought by both TML and MAG. The appellant was plainly aware of that fact, because in his defence he pleaded to the allegation that MAG had acquired goodwill in the name "Transport

The starting point for Mr Clark's argument on this ground is the fact that the Particulars of Claim assert that Transport Media is descriptive of the advertising media that is used in the business. It is trite law however that a name or mark which is descriptive can nevertheless support an action for passing off if it has acquired by use a secondary meaning indicting origin (in other words, that it has become distinctive). Mr Clark relies on a passage from Clerk & Lindsell on Torts 22dn Edition at 26013, which says:

Mr Clark develops his argument as follows. He says that the passages in Phones4u to which says the judge says he was taken did not include those passages which show that, in the case of a descriptive name, the public are expected to be more discriminating and that cases of mere confusion caused by the use of a very similar description must be tolerated. Mr Clark also submits that it is not open to the respondents to rely (as they do in their skeleton argument, on which they continue to rely) on any degree of inherent distinctiveness in the name "Transport Media". The judge made no findings about that, and it was contrary to the case of descriptiveness advanced in the pleading.

I should say straightaway that the judge's treatment of the extent to which the name

As to whether the confusion was at such a level that the claimant should be obliged to accept it, it is difficult to describe the use which the appellant was making of the name as the sort of descriptive use which the principle in the authorities to which the judge was referred was designed to protect. As I have already pointed out, the judge found at paragraph 198 that Mr Buksh had registered the website "transportmediaagency" in order to take advantage of the first claimant's goodwill in the name "Transport Media". In other words, the judge found that the defendants were themselves using the name in its secondary meaning in order to attract business to themselves rather than to allow it to go to MAG. They were not using it in any ordinary descriptive sense. Mr Clark submitted that intention to pass off was not a component of the cause of action in passing off and was therefore irrelevant. I agree that intention is not a necessary component, but it is plainly relevant; see for example Slazenger v Feltham (1889) 6 RPC 531 at pages 537-8 and Lindley LJ. I would therefore dismiss this ground of appeal.

Mr Clark's core submission under this ground was that there was no pleaded or factual base for a finding that the word "Trackaccountable" had acquired any goodwill or reputation. It was an unused trademark which was incapable of supporting an action for passing off. I think Mr Clark is right about this ground. The judge appears to have treated cybersquatting as a comprehensive basis for an allegation of passing off. In doing so, I think that he misinterpreted this court's decision in British

I would therefore allow this ground of appeal, and the result is, if my Lady agrees, the appeal will be allowed on the third ground alone but otherwise it will fall to be dismissed.

I agree.