Bhayani & Anor v Taylor Bracewell LLP

This is an application by the defendant (“Taylor Bracewell”) for summary judgment against the claimants. In the alternative the defendant seeks to strike out the claimants’ claim. The argument from both sides has gone forward on the basis that the alternative applications stand or fall together on the present facts, so for simplicity I will treat this as an application for summary judgment.

Maxwell Keay appeared for the claimants, Jonathan Moss for Taylor Bracewell.

The first claimant (“Ms Bhayani”) is a solicitor. She has practised in South Yorkshire for about 23 years, specialising in employment law. Taylor Bracewell is a firm of solicitors in South Yorkshire. In 2011 the partners of Taylor Bracewell wished to expand the employment law side of their business. At that time they had no employment law department and the firm was established only in Doncaster. It is common ground that Ms Bhayani was by 2011 an employment lawyer of some note in Sheffield. She was invited to join Taylor Bracewell as a salaried partner. On 1 April 2011 she entered into a contract of employment with the firm. On the same date Ms Bhayani also entered into a limited liability partnership with Taylor Bracewell. This has been twice amended and I will refer to the successive versions respectively as the 2011, 2012 and 2014 Partnership Agreements.

Part of the agreement between Ms Bhayani and Taylor Bracewell was that the firm would offer services under the name ‘Bhayani Bracewell’. This side of the business was centred on services supplied by Ms Bhayani, presumably assisted by others, from an office in Sheffield, Ms Bhayani’s home turf.

On 14 February 2014 Taylor Bracewell filed an application to register a UK trade mark for the words BHAYANI BRACEWELL in stylised form. The mark was registered on 23 May 2014 in respect of legal services among other things (“the Trade Mark”). In addition a website was set up under the domain name ‘www.taylorbracewell.co.uk’ name (“the Domain Name”).

Ms Bhayani spent three and a half years at Taylor Bracewell, but over that period there was a breakdown of trust between her and the other partners. Serious allegations were made by both sides. On 17 October 2014 Ms Bhayani left the firm. She admits that she was sacked following a finding of gross misconduct. In November 2014 she set up the second claimant (“BLL”). This is a company offering legal services, specialising in employment law.

Shortly after she left Taylor Bracewell, Ms Bhayani raised an employment claim against the firm.

For a time Taylor Bracewell continued to offer services relating to employment law under the ‘Bhayani Bracewell’ name without Ms Bhayani. Ms Bhayani objected and there followed correspondence between the parties.

On 8 January 2016 Ms Bhayani and BLL started the present proceedings in the general Chancery Division. The claim was transferred to the IPEC by an Order of Master Clark dated 18 January 2016.

The claimants allege that by use of the ‘Bhayani Bracewell’ name Taylor Bracewell has falsely represented that Ms Bhayani is still involved with their business and has thus passed off its services, particularly its employment law services, as being those of Ms Bhayani. The claimants allege further and more specific acts of passing off: that Taylor Bracewell has (i) stated that Ms Bhayani is still a team member on pages of the Website and on the website hosted at www.taylorbracewell.co.uk, (ii) kept a voicemail message recorded by Ms Bhayani which clients are liable to access out of hours, (iii) told a Mr Greaves of AAG Systems Ltd that Ms Bhayani was still carrying out work for Taylor Bracewell, (iv) maintained a Google business account in relation to ‘Bhayani Bracewell’, (v) used the Domain Name and refused to surrender it and (vi) used the Trade Mark and refused to surrender it.

The Particulars of Claim set out a number of alleged instances of confusion. It is said that after Ms Bhayani left Taylor Bracewell, one Sheffield newspaper and a number of individuals wrongly assumed that she was still working for the firm.

The claimants also seek revocation of the Trade Mark pursuant to s.46(1)(d) of the Trade Marks Act 1994 (“the 1994 Act”) on the ground that in consequence of the use made of it by Taylor Bracewell, it is liable to mislead the public. Further, they seek an order that Taylor Bracewell surrenders the Domain Name.

In its Defence, Taylor Bracewell denies passing off and denies that the Trade Mark is invalid. Taylor Bracewell more specifically denies that either claimant owns any relevant goodwill. Separately, Taylor Bracewell relies on the successive Partnership Agreements and says that any goodwill there may be associated with the Bhayani Bracewell trading name is retained by Taylor Bracewell under the terms of those agreements.

The Defence pleads that the firm stopped trading as ‘Bhayani Bracewell’ following the settlement of Ms Bhayani’s employment claim in April 2015 save for minor historical references. The other specific examples of alleged misrepresentation relied on by the claimants are either said to have been representations which were accurate at the time, or not to have happened at all, save that Taylor Bracewell admits that it has surrendered neither the Trade Mark nor the Domain Name, claiming that it is entitled to both.

Taylor Bracewell has counterclaimed, alleging breaches by Ms Bhayani of the 2014 Partnership Agreement.

In her Reply, so far as is relevant to this application, Ms Bhayani claims that any right that Taylor Bracewell may have acquired to use the ‘Bhayani Bracewell’ trading name terminated after she left the firm.

I was told by Mr Keay that BLL does not pursue its claim for passing off, for reasons relating to the time at which the acts complained of started, so I am concerned only with that of Ms Bhayani. I did not understand this to affect the claim that the Trade Mark is invalid.

In Mellor v Partridge [2013] EWCA Civ 477 Lewison LJ set out the principles to be applied in an application for summary judgment:

“[3] … Our task is not to decide whether the claimants are right. Our task is to decide which parts of the case (if any) are fit to go to trial. If I may repeat something I have said before (Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), approved by this court in AC Ward & Son v Catlin (Five) Ltd [2009] EWCA Civ 1098):

“The correct approach on applications by defendants is, in my judgment, as follows:

i)

The court must consider whether the claimant has a ‘realistic’ as opposed to a ‘fanciful’ prospect of success: Swain v Hillman [2001] 1 All ER 91;

ii)

A ‘realistic’ claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8];

iii)

In reaching its conclusion the court must not conduct a ‘mini-trial’: Swain v Hillman;

iv)

This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases, it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10];

v)

However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;

vi)

Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;

vii)

On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.”

Taylor Bracewell relies on subparagraph (vii) of Easyair quoted above and on a point of law, alternatively on an argument of construction.

First, Taylor Bracewell says that in law Ms Bhayani does not own goodwill to found a case in passing off. It is common ground that Ms Bhayani has never practised as a sole practitioner. Before she joined Taylor Bracewell she worked at a firm called Watson Esam, initially as an employee and then as an equity partner from 1996 to 2011. Mr Moss argued that any goodwill generated by her activities as a solicitor before October 2014 can only have vested in Watson Esam and subsequently in Taylor Bracewell. In each case the goodwill was associated only with those firms’ respective trading names. Ms Bhayani has never owned any relevant goodwill herself.

Secondly, on a correct construction of the 2014 Partnership Agreement Taylor Bracewell is entitled to use the trading name ‘Bhayani Bracewell’.

Thirdly, the contractual right to use that name means that the Trade Mark cannot be invalid pursuant to s.46(1)(d).

Ms Bhayani argues that the goodwill she generated while she worked at Watson Esam and Taylor Bracewell was associated with her own name and was at all times owned by her. Mr Keay submitted that in law it is not necessarily the case that goodwill generated by an employee or partner is vested in the employer or partnership, as the case may be. It will depend on the facts. Those facts have to be explored at trial.

On a correct construction of the partnership agreements, Ms Bhayani’s consent to use ‘Bhayani Bracewell’ terminated once she had left. To the extent that there was any doubt about that, the agreements have to be construed in the light of the relevant factual matrix, which should be left until trial.

Finally, even if Taylor Bracewell were to own the relevant goodwill, its use of the ‘Bhayani Bracewell’ name and other representations that Ms Bhayani was still part of the firm rendered the Trade Mark liable to deceive the public.

During the course of her career at Watson Esam Ms Bhayani acquired a significant reputation, particularly in the Yorkshire area, as a solicitor with a high level of expertise in the field of employment law. It is not in dispute that reputation by itself does not found an action in passing off. The question is whether Ms Bhayani also acquired goodwill.

Goodwill cannot in law subsist as a thing alone – it is indivisible from the business with which it is associated, see Star Industrial Co Ltd v Yap Kwee Kor [1976] F.S.R. 256, at 259, recently endorsed by the Supreme Court in Starbucks (HK) Ltd v British Sky Broadcasting Group plc [2015] UKSC 31; [2015] F.S.R. 29, at [23] and [51]-[52].

This is to be distinguished from reputation which exists by itself. A solicitor celebrated for his or her expertise may enjoy the highest possible reputation and this will be personal, attaching only to that individual. But reputation alone cannot form the basis of an action for passing off, no matter how high the wattage of celebrity.

In the general run, goodwill generated by the acts of an employee will be vested in the employer, see Asprey & Garrard v WRA (Guns) [2002] F.S.R. 31, at [36]; Kingston, Miller & Co. Ltd. v Thomas Kingston & Co. Ltd. (1912) 29 R.P.C. 289, at 295. Similarly, where an individual works in a partnership the goodwill generated by his acts will in the normal course vest in the partnership, see Leather Cloth Co. v American Leather Cloth Co. [1865] 11 H.L.C. 523. This is not a hard and fast rule of law. Both Mr Moss and Mr Keay submitted, and I agree, that on certain facts an employee or partner could generate goodwill of their own, distinct from that of the employer or partnership. Mr Keay referred me to a line of three cases in the last century and a fourth more recent case to prove and explain the exception to the general rule.

In Landa v Greenberg [1908] 24 TLR 441 the plaintiff contributed a weekly column for children to The Jewish Chronicle under the nom de plume ‘Aunt Naomi’. There was no contract of employment. The proprietor made some suggestions regarding the column, but otherwise the plaintiff was left to her own devices. There was a change in proprietorship of the paper, following which, for a while, the plaintiff continued with the column. She then also contributed a piece to another newspaper under the ‘Aunt Naomi’ name. She was dismissed. She brought the action seeking, among other things, a declaration that she was entitled to the ‘Aunt Naomi’ name and also an injunction against the defendant, the new proprietor of The Jewish Chronicle, to restrain him from using the name. Eve J ruled that the plaintiff was entitled to the declaration, but upon the defendant disclaiming any intention to use the name in the future, did not grant the injunction. Goodwill was not discussed by the judge and it is not clear which cause of action he had in mind in reaching his decision.

In Hines v Winnick [1947] Ch 708 the defendant was engaged by the plaintiff to conduct and play in an orchestra. The orchestra played in a radio show called Ignorance is Bliss, broadcast by the BBC. In this show the plaintiff used the name ‘Dr Crock’ as the leader of ‘Dr Crock and his Crackpots’. The defendant sought to replace the plaintiff with another musician to conduct and play as ‘Dr Crock’ in the plaintiff’s stead. Vaisey J referred to Landa v Greenberg. He said that he saw no relevant difference between the two sets of facts and granted an injunction to restrain the defendant from using the name ‘Dr Crock’. The headnote of the report states that the plaintiff was employed by the defendant. Mr Moss argued that on close inspection of the judgment itself, he was not. I go no further than saying that it is open to doubt. On this occasion it is clear from the judgment that the declaration granted was based on passing off, although it appears that the case was argued and indeed reasoned solely on the basis of which party owned the reputation in the name ‘Dr Crock’. Reputation may or may not have been distinguished from goodwill; the latter appears not to been mentioned at all.

Forbes v Kemsley Newspapers Ltd (1951) 68 R.P.C. 183 was another case about a pen name. The plaintiff was employed by the defendant for four and a half years during which she wrote an article every week in the Sunday Times and sometimes in other newspapers owned by the defendant. The articles were written under the pen name ‘Mary Delane’, chosen by the defendant. Following termination of the plaintiff’s employment, the defendant continued to publish articles by ‘Mary Delane’, using a different author. The plaintiff brought an action for passing off, seeking an injunction to restrain the defendant’s use of the name. It was conceded by the defendant and accepted by Wynn-Parry J that a person who writes under a pseudonym is entitled to the property in that name as part of his or her stock-in-trade unless there is term, express or implied, to the contrary in an agreement with an employer. Wynn-Parry J referred to Landa v Greenberg and Hines v Winnick in this regard. No contrary term was found to exist and the plaintiff was granted her injunction.

The more recent case to which I was referred was Irvine v Talksport Ltd [2002] EWHC 367; [2002] F.S.R. 60. The claimant was the Formula 1 racing driver Eddie Irvine, at the peak of his fame at around the time of the dispute. The defendant was the operator of a radio station, Talk Radio, which had obtained the rights to cover the Formula 1 Championship. It engaged the services of a marketing company to promote its coverage among potential advertisers. The marketing company prepared, among other things, a brochure on the front cover of which was an image of the claimant holding a portable radio bearing the words ‘Talk Radio’. It had been created by manipulating a photograph of the claimant. The claimant brought an action for passing off contending that his image on the cover of the brochure falsely represented that he had endorsed the defendant’s radio station. Laddie J gave judgment in favour of the claimant.

Mr Keay relied on the judge’s ruling in relation to one of the arguments advanced by the defendant. This was that the claimant owned no goodwill himself because he provided his endorsement services through a network of companies. To overcome this objection the claimant joined those companies as claimants, but the argument was rejected by Laddie J in any event:

“[75] … I do not think there was anything in this. The fact that the claimant, no doubt for tax reasons, makes his endorsement available through companies does not alter the fact that it is his fame and personality which is being exploited and that the misrepresentation made to the relevant public, who would know nothing about his corporate arrangements, is that it is he who had endorsed the defendant’s radio station.”

Mr Keay argued that this was an example of goodwill vesting in an individual personally even though his business was conducted through his companies.

Mr Keay summarised the proposition of law to be derived from these four cases thus: any person who acquires a reputation by carrying out acts under their own name, real or otherwise, generates actionable goodwill on which they can personally rely. It makes no difference whether the person is employed or works for a partnership. In the way of things, Mr Keay said, generating goodwill attached to a person’s own name is more likely to happen where the person is a professional (in the sense of belonging to a profession libérale, such as the legal profession) as opposed to, say, being a professional welder. But in principle the rule applies to anyone in any job.

Mr Moss argued that the case law led to a much more restricted proposition. Goodwill generated by an employee will vest in the employer unless it is generated by activities outside the course of the employer’s business – such as work done by a columnist. In the latter case a separate goodwill is generated and that may be owned by the employee. The same applies in relation to a partner’s work for a partnership versus separate work done outside the scope of duties as a partner.

I do not accept Mr Keay’s argument. It seems to me that this would fly in the face of the general rule, long established by Asprey, Kingston Miller and other cases, that goodwill generated by the activities of employees in the course of their employment vests in the employer and that, likewise, goodwill generated in the course of duties carried out within a partnership vests in the partnership. Mr Keay’s proposition would not merely create an exception to that general rule, it would in large part undermine it altogether.

I accept Mr Moss’s proposition that the general rule does not apply to goodwill generated by acts done outside duties to the employer or partnership. To the extent that this requires support, I think it comes from Irvine v Talksport. Mr Irvine was under contract with Ferrari. The terms of the contract were apparently not relevant and so not made clear, but even if it had been a contract of employment, it was unlikely that his duties were stated to include the endorsement of products under his own name. The business conducted by Mr Irvine in the field of endorsement was quite separate from his business as a racing driver. It generated a distinct goodwill which was his and on which he could found an action for passing off.

I should say that the particular point at issue in the present case was plainly not in the mind of Laddie J in Irvine. The judge stated more than once that the law of passing off protects a claimant’s reputation or goodwill. He saw no reason to distinguish Mr Irvine’s business in the endorsement of products from his business as a racing driver because it was not relevant to that case. With regard to the passage of the judgment relied on by Mr Keay, I think the point being made by Laddie J was simply that there was no relevant entity other than Mr Irvine known to the public and therefore no entity other than him in which goodwill could vest. That does not apply in the present instance.

I turn to the Landa v Greenberg, Hines v Winnick and Forbes v Kemsley Newspapers line of cases. I do not think they are consistent with either Mr Moss’s or Mr Keay’s proposition. In all three cases the plaintiff’s acts which generated the plaintiff’s own goodwill (assuming that is the correct analysis in every case) were very much done as part of the job they were engaged to do, whether as employee or not. Equally, in none of those cases was it stated that goodwill generated by acts done under an employee’s name will always vest in the employee.

The feature common to these three cases is that the plaintiff was a writer or performer. It could be that in each case the court assumed as a fact that the public believed that the artist bore sole responsibility for the quality of his or her writing or performing. Therefore the goodwill generated by the artist’s acts vested in them personally and not in the employer. In other words, there is a special right to goodwill accorded to artists based on the unusual way in which their business is conducted and perceived by the public. This is consistent with the modern law of passing off if it is soundly based on fact, although I think that a court today might apply more scrutiny to the facts of such a case and be less likely to make assumptions.

The professional acts carried out by Ms Bhayani which have earned the reputation she enjoys were done either in the course of the business of Watson Esam or that of Taylor Bracewell. There are no other candidates for a relevant business. In particular, there was no separate business, of the Irvine endorsement type, which could be characterised as Ms Bhayani’s own. Subject to very unusual facts, the general rule will follow: the goodwill vested in Watson Esam and Taylor Bracewell, not Ms Bhayani.

No such unusual facts have been pleaded or suggested in argument. This does not come as a surprise. Leaving aside sole practitioners, the public are well aware that a solicitor, whether employed or an equity partner, is not a free agent. His or her performance will be both assisted and constrained by the terms of employment or partnership and by the advice and pressure exerted by colleagues. Ultimately the quality of services of any individual solicitor is guaranteed by the firm. If the quality falls short, any compensation is available from the firm, not the individual solicitor. The goodwill generated by a solicitor’s work qua solicitor vests in the firm. In my view Ms Bhayani has no realistic prospect of establishing that in law she owns goodwill on which to base a case of passing off against Taylor Bracewell.

Before moving on to terms of the Partnership Agreements, I would make one further observation. None of the foregoing should be taken to suggest that if a solicitor were to move from firm A to firm B, and firm A were to represent that the solicitor was still employed by them or remained a partner, there could never be any recourse to the law. It could be, in an appropriate case, that goodwill associated with the name of the solicitor, now vested in firm B, would provide a cause of action. On certain facts, there may alternatively be an action for injurious falsehood.

It was common ground that it was sufficient to consider the 2014 Partnership Agreement which superseded its predecessors. It included the following terms:

I take the view that irrespective of the law of passing off, the combined effect of clauses 4.3 and 11.2 was that the goodwill generated by Ms Bhayani during her time at Taylor Bracewell belonged to Taylor Bracewell. In this regard, although the definition of Intellectual Property does not expressly mention goodwill, I think it is drafted broadly enough to encompass goodwill.

Mr Keay argued that Ms Bhayani’s consent to the use of her name by Taylor Bracewell, including use of the trading name ‘Bhayani Bracewell’, came to an end when she left. For the avoidance of doubt, she expressly withdrew that consent in correspondence. Therefore any right which Taylor Bracewell had previously had to use her name ended on 17 October 2014.

Even if Mr Keay were right, it would not assist Ms Bhayani’s case for passing off. The goodwill she generated between 1 April 2011 and 17 October 2014 was never hers. The terms of clause 21.6.5 are unusual and the effect of the clause was disputed, although on any view it now allows Ms Bhayani to use her own name in the course of trade. But no matter how that clause is construed it does not change the essential fact that Ms Bhayani owns no relevant goodwill.

Little attention was paid to the claim that the Trade Mark is invalidly registered pursuant to s.46(1)(d) of the 1994 Act. That section provides:

“46 (1) The registration of a trade mark may be revoked on any of the following grounds –

…

(d)

that in consequence of the use made of it by the proprietor or with his consent in relation to the goods or services for which it is registered, it is liable to mislead the public, particularly as to the nature, quality or geographical origin of those goods or services.”

The pleaded grounds for the liability of the Trade Mark to mislead the public are that use of the Trade Mark by Taylor Bracewell is likely to lead members of the public to believe that Ms Bhayani is still associated with that firm. Taylor Bracewell’s pleaded position is ambivalent: it claims to have stopped using the name except for historical references that will come to an end, but claims that it is licensed to use the Trade Mark under the Partnership Agreement. Meanwhile I have no reason to doubt that significant goodwill had been built up by BLL in connection with the Bhayani trading name by the date of the claim form.

That leaves Taylor Bracewell’s argument that it retains the contractual right to use the ‘Bhayani Bracewell’ trading name and thereby the Trade Mark. Even if Taylor Bracewell’s argument were correct, I am not satisfied that it necessarily follows that Taylor Bracewell’s use of the Trade Mark would not engage s.46(1)(d).

In my view the claimants’ claim for revocation of the Trade Mark has a realistic as opposed to fanciful prospect of success at trial.

Taylor Bracewell’s application succeeds in relation to the claimants’ claim for passing off and to that extent judgment shall be entered in favour of Taylor Bracewell. The application does not succeed in relation to the claim for revocation of the Trade Mark.

It was not in dispute that if Taylor Bracewell’s counterclaim stood alone, it should be transferred out of IPEC. Bearing in mind that the revocation of the Trade Mark remains in issue, I will hear the parties on the appropriate way forward.