The Court of Appeal handed down a decision on 11 October 2001 in Asprey & Garrard Ltd - v- (1) WRA (Guns) Ltd (2) William R Asprey which illustrates some of the issues which can arise when a business which trades under a family name faces competition from one of the family. The Court considered issues of passing off and trade mark infringement, including the application of the own name defence both to the Second Defendant, Mr Asprey, and to the First Defendant, a company set up by Mr Asprey, and 70% owned by him, which traded under the name, William R Asprey Esq. An injunction had been granted by Mr Justice Jacob on Summary Judgment (a procedure in which the Court gives judgment without a trial) restraining, among other things, use by the First and/or Second Defendants of the Second Defendant's name, "William R Asprey Esquire" for a luxury goods business.

The Situation

The Claimant, Asprey & Garrard Ltd, was accepted by the Court and the Defendants as having a world-wide reputation extending to a wide range of luxury goods. The Court of Appeal considered the name Asprey to be recognised by the public as distinctive of the Claimant and its goods.

The Second Defendant, Mr Asprey, was a direct descendant of the Asprey family who had owned the Claimant's business up until 1995. He had worked at the Claimant's Bond Street shop in the gun department. In 1998, Mr Asprey incorporated two companies under the names William Asprey (Guns) Ltd and William Asprey Ltd. The Claimant, for whom he still worked, requested he change the names of the companies on the basis that he would otherwise be infringing their ASPREY trade mark and passing off. He changed the company names to WRA (Guns) Ltd (the First Defendant) and WRA (Sporting Agents) Ltd. In 1999, he left the Claimant's employment and set up a competing luxury goods business in Mayfair through the First Defendant, although with an emphasis on guns. Mr Asprey put a sign over the shop door: WILLIAM R ASPREY ESQUIRE.

Mr Asprey publicised his business, stating "William R Asprey Esq. was established in 1999 by William Asprey, 7th generation of the renowned Asprey family who established their first luxury business in 1781 & Continuing his family tradition, William Asprey is now opening a new luxury goods store in Mayfair & ". The launch of this business was reported in Hello! Magazine under the title "ASPREY LAUNCH". There were numerous examples of confusion having occurred supplied by both parties. Mr Asprey had been at pains, in all the cases of confusion of which he had been aware, to distinguish his business from that of the Claimant. He had even, in January 2001, put a disclaimer in the window of his shop to dissociate himself from the Claimant. The Claimant brought a claim against the Defendants for trade mark infringement under Section 10(1) or 10(2) of the Trade Marks Act 1994, and for passing off.

The Law

Passing off requires, in general terms, the Claimant to show that he has goodwill attached to the goods or services which he supplies under an identifying mark or "get-up", that the Defendant has made a misrepresentation that is likely to lead the public to believe that his goods or services are those of the Claimant, and that the misrepresentation has caused damage to the Claimant. The misrepresentation need not be intentional and does not have to be supported by instances of actual confusion, although such instances usually provide persuasive evidence. There is a limited "own-name" defence to passing off which was summarised by the Court of Appeal in Asprey as follows: a man is entitled "to carry on business in his own name subject to two conditions: (1) he must not do anything more than that to cause confusion with the business of another, and (2) he must do it honestly."

The "own-name" defence to trade mark infringement is set out in Article 6(1)(a) of the Trade Marks Directive (89/104/EC) which exempts from trade mark infringement the use by a third party of his own name or address in the course of trade provided that such use is in accordance with honest practices in industrial or commercial matters. Section 11(2)(a) of the UK Trade Marks Act 1994 corresponds to Article 6(1)(a) of the Trade Marks Directive and states that a registered trade mark is not infringed by "the use by a person of his own name or address" (again, subject to the proviso that such use is in accordance with honest practices in industrial or commercial matters).

What the Court of Appeal Decided

On passing off, both the High Court and the Court of Appeal accepted that Mr Asprey had sought to correct any instances of confusion. It was to his credit that he had put up a disclaiming notice. The High Court concluded, however, that "although & I entirely acquit Mr William Asprey of any intention to pass off, I fear that what he is doing would lead to just that, the deception of some customers". On the disclaimer, the Court of Appeal supported Mr Justice Jacob's judgment that "disclaimers to avoid confusion which would otherwise occur, unless they are massive and omnipresent, hardly ever work". A significant factor for the Court of Appeal was the use made by the Defendants in their publicity material of William Asprey's connection with his forebears as traders in luxury goods. The Court of Appeal stated that the goodwill generated by six generations of Aspreys previous to William Asprey belonged unquestionably to the Claimant. The Claimants had no doubt paid handsomely for that name and the goodwill in it when they purchased the Asprey business in 1995. The Court of Appeal found it hard to understand why the Defendants thought it important to trade under a trading name incorporating the Asprey name unless it was to obtain the benefit of an association with the Asprey's trading past and hence with the Claimant's goodwill. The Court of Appeal found Mr Asprey's argument that the trading name was used in order to identify him as boss of his company unconvincing. It considered that use of his initials was sufficient to provide this identification, as used by Mr Asprey in the First Defendant's new company name.

On the own-name defence, the Court of Appeal gave short shrift to the First Defendant's argument based on its trading name. The First Defendant's "own-name" is WRA (Guns) Ltd. It could not use its adopted trading name to rely on the own-name defence. The Court of Appeal reiterated the judge's statement that the defence had never been held to apply to names of new companies as otherwise a route to piracy would be obvious. The same logic applied to a newly adopted trade name. Equally, on trade mark infringement, the own-name defence was not available to the First Defendant as it was not using its own name.

In considering the application of the own name defence to Mr Asprey, the Court of Appeal questioned the "pragmatic approach" taken by Jacob J in treating the case as a claim against Mr Asprey. Mr Justice Jacob had reasoned that if Mr Asprey had a defence then, although the company might not have been entitled to use the name, Mr Asprey could, in practice, carry on the current business. The company's assets could easily be transferred to him and the shop, advertisements and everything else would look exactly the same. In finding against the Defendants the Judge therefore granted an injunction against both the trading company and Mr Asprey.

As observed by the Court of Appeal, the injunction was very wide, extending to prohibiting Mr Asprey from carrying on business at all under his own name in the luxury goods specified in the Order. The Court of Appeal considered that, given the prima facie entitlement to carry on business in his own name, it was important to know precisely what Mr Asprey was doing or threatening to do if he was to be denied that entitlement. The Judge had not had sufficient facts to decide that point and the Court of Appeal concluded therefore that the injunction should be limited to cover only Mr Asprey's activities in causing the trading company to carry out the prohibited activities. The limited injunction did not therefore cover any business which Mr Asprey might carry on in future in his own name and on his own account.

What Now?

In light of this decision, it appears thatif a family or individual establishes a business under its or his name and the business is then sold off, a relative of that family or individual - who may have had nothing to do with the original business or sale - may effectively be prevented from setting up a competing business under their own name.

The difficulty was touched on by Mr Justice Jacob when addressing the Claimant's point that Mr Asprey had been endeavouring to use the Asprey heritage in his advertising. Jacob J observed that Mr Asprey was entitled to say he is the seventh generation Asprey and proud of that heritage. The difficulty was that in so saying it had to be unambiguous that he was no longer connected with Aspreys (the Claimant). Despite Mr Asprey's efforts to avoid confusion and "evident honesty" the Judge decided that what Mr Asprey had done was on the wrong side of the line.

The underlying difficulty in this and similar cases appears to be the nature of goodwill in a family trading name. The goodwill may derive partly from the activities and reputation of the business (business goodwill) and partly from the family reputation and heritage (family goodwill). In Asprey, Jacob J decided effectively that business goodwill prevailed over family goodwill. The Court of Appeal did not, however, rule on this issue and so, for the time being, the High Court decision stands as a current authority on the issue.

Written by Rebecca Harrison and Anna Duffus. This article will be published in the December issue of WIPR.

Important - The information in this article is provided subject to the disclaimer. The law may have changed since first publication and the reader is cautioned accordingly.