IPEC decision: Laura Thurgood v Danielle Laight & Wash Wiggle & Wag Ltd [2024] EWHC 2947 (IPEC)

In these proceedings, David Stone, sitting as an Enterprise Judge in the Intellectual Property Enterprise Court (IPEC), found for the claimant, who successfully established her claim for passing off.

The judgment provides guidance as to how goodwill may arise in connection with small, local service businesses, and how brand use and reputation are assessed in such context.

In this article, Paulina explores the dispute and decision, and provides some practical takeaways.

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Paulina Kasprzak | Connect on LinkedIn | pkasprzak@hlk-ip.com

Background to dispute

The first defendant, Ms Laight, participated in the claimant’s dog grooming business, which traded within a 30-mile radius of Redditch (the “Territory”).

The claimant operated the business from 2017, initially under the name SCRUFFY2FLUFFY.

The first defendant started working for the claimant, as an independent contractor, in June 2018. There was no formal contract in place between the parties to record the arrangement.

In July 2018, the claimant purchased a mobile dog grooming van from an entity which had been trading as WASH WIGGLE & WAG near Northampton. The claimant testified that the owners of the van did not wish to continue to trade as WASH WIGGLE & WAG and were happy for her to use that name. Thus, the WASH WIGGLE & WAG name was adopted by the claimant, alongside SCRUFFY2FLUFFY.

The first defendant used the van to provide mobile dog grooming services on behalf of the claimant and conducted approximately 2,600 grooms over 18 months. The claimant’s business had approximately 838 customers, around 700 of whom were regular and based within the Territory. Reviews for the business on various websites were positive.

The first defendant received an additional fee for each new customer she introduced to the business and was, therefore, incentivised to promote it. She did so by setting up and managing the business’s Facebook and Instagram pages, something which the claimant did not do due to her limited understanding of social media.

The business relationship between the claimant and the first defendant broke down in May 2020, as the claimant had become concerned that the first defendant was undertaking mobile grooms in the course of her work but not accounting to the claimant for the money paid by customers. Ms Laight ceased to be involved in the business, and instead groomed dogs on her own, under the WASH WIGGLE & WAG name, in nearby Birmingham. She incorporated the second defendant, Wash Wiggle & Wag Limited and registered the domain name www.washwigglewag.co.uk. She also chose not to provide the claimant with the passwords to her business’s Facebook and Instagram accounts, instead adopting the pages as her own, and began to promote her new dog grooming business under the name WASH WIGGLE & WAG. There was evidence before the judge that former customers of the claimant’s business used the first defendant’s services, supplied via the second defendant.

The claimant alleged passing off by the defendants, in relation to the dog grooming business. The first defendant denied passing off, arguing that:

• The claimant had not traded sufficiently under WASH WIGGLE & WAG to have established goodwill.
• The claimant had traded under other names, including SCRUFFY2FLUFFY and DOGGY STYLE, such that customers would not recognise her business as WASH WIGGLE & WAG.
• The first defendant was the only groomer in the claimant’s business and she had built up her own reputation – it was that which had brought in custom.
• Nobody had been misled, because nobody thought that the grooming services offered by the defendants after the first defendant left the claimant’s business were associated with the claimant.
• Any damage to the claimant’s business following the first defendant’s departure was not caused by the latter’s actions, but rather by poor customer service by the claimant, either from alleged injury to a dog or from the way customers’ bookings were taken.

Issues considered by the judge

To decide this matter, the judge had to consider the following issues:-

1. Goodwill – did the claimant own any goodwill under or in connection with WASH WIGGLE & WAG from about June 2018 onwards, including by reason of the use of WASH WIGGLE & WAG by her and/or on her behalf and/or with her licence and/or consent and, if so, to what extent?;
2. Misrepresentation – had either of the defendants caused or were likely to have caused members of the public to be deceived into believing, contrary to the fact, that the defendants’ businesses and/or services were those of the claimant, and/or that the defendants’ respective businesses and/or services were endorsed, approved, authorised, licensed, franchised or somehow otherwise associated in the course of trade with the claimant?; and
3. Damage – had the claimant suffered damage to her goodwill by reason of the said acts of deception and/or the said likelihood of deception?

Although there were minor variations of WASH WIGGLE & WAG used by both sides (for example, adding commas, or using “and” instead of the ampersand), the judge ignored these variations. He found that they did not affect the understanding of the signs used and were unlikely to be noticed by consumers of the relevant dog grooming services.

Decision

Goodwill

The judge found that the claimant’s business had generated goodwill in the Territory under the name WASH WIGGLE & WAG between the purchase of the van on 3 July 2018 and the first defendant’s departure from the business on 22 May 2020. The name was used in the course of trade and not in a descriptive way, but rather to indicate the source of the services being offered by the business.  This included the use of the name on the van, in advertisements in local newspapers and on the website at Yell.com, as well as on Facebook and Instagram pages promoting the claimant’s business. The judge decided there was ample usage to create goodwill within the Territory – the number of customers of the business expanded rapidly, from very few to 700 repeat customers, with 2,600 grooms undertaken in total. Although the name was used on social media alongside the sign SCRUFFY2FLUFFY this did not matter. The judge held that businesses can use multiple trade marks to promote their goods and services and the use of the sign SCRUFFY2FLUFFY did not demote the customer’s perception of WASH WIGGLE & WAG to a descriptive term, or limit the goodwill acquired in connection with that name. Further, the sign SCRUFFY2FLUFFY did not appear on the van or in the advertisements placed in local newspapers.

The judge concluded that such use meant that the claimant owned goodwill generated in connection with the name WASH WIGGLE & WAG, in relation to dog grooming within the Territory, which was exclusively associated with the claimant’s business. He rejected the first defendant’s claim that the goodwill attached to her as a dog groomer, rather than to the claimant’s business. He held that customers of the business were clearly aware of the WASH WIGGLE & WAG name and the fact that the first defendant was not the owner of the business. Whilst there was some personal loyalty to the first defendant and positive reviews of her services, that did not detract from the legal position that the goodwill generated belonged to the claimant’s business, not to the first defendant.

Misrepresentation

The judge was also satisfied that the adoption by the first defendant of an identical name to that of the claimant, in relation to identical services provided to the same customers in the same Territory, resulted in customers wrongly believing that there was a connection in the course of trade between the parties. He also observed that in a passing off case it is not necessary to bring before the court an example of a misled witness in order to prove misrepresentation.

Damage

The judge was “completely satisfied” that there was sufficient damage for the tort of passing off to be made out. The first defendant had diverted customers from the claimant’s business to her new business, which resulted in the number of claimant’s customers falling significantly.

Consequently, the claimant’s claim for passing off against the defendants was successful.

Although the first defendant argued that she and the claimant had been partners in the dog grooming business operated by the claimant, which gave her some rights in any goodwill generated by that business, that claim was later abandoned. The judge held that it was abundantly clear to him that the first defendant was not a partner in the claimant’s business, not least because she made no capital contribution to the business, was not a decision maker within the business and did not receive any profit share generated by it.

Practical takeaways

Key lessons from this decision include:

1. Even relatively small-scale trade (here 2,600 grooms and 700 regular customers, over 18 months) can be enough to give rise to protectable goodwill in respect of a local service business. While each case depends on its particular facts, the decision offers a useful benchmark for what can be considered sufficient.
2. Using more than one trading name does not necessarily prevent the generation of goodwill in respect of both names. As long as customers perceive each name as indicating the trade origin of the services, and not as a descriptive term, goodwill can be generated.
3. Even if an individual is the face of the business and enjoys strong customer loyalty, the goodwill will vest in the business, especially where the individual is not perceived as its owner.
4. To prove someone was a business partner (rather than a contractor), evidence of a formal agreement is always helpful. However, the court will also consider such factors as whether the individual made a capital contribution, shared in profits, and had any decision-making power in connection with the business.

Need assistance?

This is for general information only and does not constitute legal advice. Should you require advice on this or any other topic then please contact hlk@hlk-ip.com or your usual HLK advisor.