Not quite "One in a Million", says Court of Appeal

A short but sweet judgment from Lord Justice Floyd in Media Agency Group Limited and Transport Media Limited v Space Media Agency Limited and Ors [2019] EWCA Civ 712 has overturned a rather generous first instance finding of passing off through cybersquatting.

The Claimants (and Respondents in the appeal) are part of a successful outdoor media planning and buying group, trading under the name "Transport Media", among others, since c. 2009. The First Claimant owns the domain transportmedia.co.uk and has owned a UK trade mark for TRACCOUNTABLE in class 35 since March 2014.  The Defendants included a former employee of the First Claimant, Mr Shafiq. In October 2016 Mr Shafiq, together with Mr Buksh (the sole Appellant), incorporated the First Defendant, in which they were the sole shareholders. The First Defendant began to use the trading style "Transport Media Agency", and Mr Buksh acquired several domain names for the business, including transportmwediaagency.co.uk [sic.] and trackaccountableadvertising.com.

Our artist's impression of how the billboards might have looked

At first instance, the Claimants succeeded in their passing off claim based on the trading styles "Transport Media" and "Traccountable". Mr Buksh's appeal covered three points. The first two failed (and also were not especially interesting).

The third, which succeeded, concerned "Traccountable". There was no evidence before the first instance judge that the Claimants had acquired goodwill in "Traccountable". In fact, it was clear from the evidence that the Claimants had not made any (public) use of the name. The trial judge appeared to base his decision on two points. First, the evidence showed that Mr Shafiq became aware of the names "Traccountable" (and "Transport Media") from his previous employment with the First Claimant, and used this knowledge to set up the First Defendant. (However, the appeal concerned the judge's finding of passing off on this basis, and not breach of confidence). Second, in their Defence the Defendants had not denied the relevant part of the Particulars of Claim. Instead, they had required the Claimants to prove the relevant allegation. The trial judge held that this was inadequate because the Defendants were in a position to admit or deny the allegation, but did not do so. Therefore, CPR 16.5(1)(b) operated to produce an implied admission by the Defendants.

This, said the Court of Appeal, was incorrect. The Particulars of Claim did not allege that the Claimants had acquired goodwill in "Traccountable". The trial judge appeared to treat the fact of cybersquatting as proof in itself of passing off. This finding departed significantly from the leading case on this topic, British Telecommunications plc and Ors v One In A Million Ltd and Ors [1999] 1 WLR 903. Even if, as seemed to be the case here, the domain name in question was an instrument of fraud, this did not dispense with the requirement to prove a complete case in passing off (i.e. goodwill, misrepresentation and damage).

Eagle-eyed readers will have noticed that the outcome might have been different had the Claimants relied on the First Claimant's trade mark for TRACCOUNTABLE. But, even though they had gone to the trouble of registering this trade mark, and much to the trial and appeal judges' lament, the Claimants did not assert the mark. Therefore, the Court's hands were tied. Whoops.