A Wise decision

The recent Inner House decision in Wise Property Care Ltd v White Thomson [2008] CSIH 44 is a useful reminder of the value of taking swift action to obtain an interim interdict in passing off, and for that matter other types of IP cases, and of the difficulties facing a party who wishes to appeal against an interim interdict once granted.

The background

The case has a complex background, borne out of a family dispute where the surname of the three brothers involved was White. The brothers initially worked for their father’s company, White Thomson Preservation (Northern) Ltd, which specialised in the investigation and treatment of dry rot, rising damp, woodworm and similar problems. In 2002 the brothers left their father’s company to set up their own business, White Preservation Ltd, which operated in the same area, and the two businesses competed with each other until late 2003. The father commenced proceedings for winding up his company in around May 2004.

White Preservation continued to be operated by the three brothers until, following a dispute, Ewan White sold his share of the company in 2004. The two remaining brothers (Gavin and Grant) continued the business following the split and it went from strength to strength. In early 2006 they sold the company and goodwill in the brand to Wise Property Care (“Wise”), who maintained the previous company name and operated it as a trading division. 

Then, in late 2007 and early 2008, more than three years after he left White Preservation Ltd, Ewan White set up two companies, White Thomson Preservation Ltd and White Thomson Preservation (Northern) Ltd, in direct competition to White Preservation in the property preservation market.

First instance hearings

Wise, as the pursuer, successfully obtained an interim interdict ex parte at a hearing in the Outer House on the basis that the names White Thomson Preservation Ltd/White Thomson Preservation (Northern) Ltd were confusingly similar to the name of their trading division White Preservation and that the use of those names was passing off. The defenders then applied for recall of that order.

The Lord Ordinary, Lord Matthews, held that the three prerequisites for passing off (goodwill to protect, likelihood of confusion, which as a result was reasonably foreseeable to cause damage) were satisfied. He placed great weight on transcript evidence of a telephone call made by a private investigator to the third defender, Ewan White, in which White attempted to foster the confusion by saying that the pursuer’s business address was a “maildrop” of his company. Lord Matthews also indicated in his opinion that the likelihood of confusion was reasonably foreseeable in the objective sense because the two parties had similar names, similar addresses, provided similar services and traded in a similar geographical area. There was therefore a prima facie case. Further, the balance of convenience favoured the pursuer because it was an established business whereas the defenders were only recently incorporated. The defenders appealed to the Inner House.

The Inner House decision

The three judges, Ladies Paton, Smith and Dorrian, unanimously rejected the appeal and agreed that the Lord Ordinary was entitled to refuse to recall the interim interdict. They found no fault with the Lord Ordinary’s approach to addressing either the prima facie case or balance of convenience. Of course the hurdles to overcome to appeal successfully against an interim interdict are particularly high. Essentially a party must either show that the first instance judge has made an error in law, or demonstrate that no reasonable judge would have reached the decision based on the evidence and arguments before him. The latter is an exercise of discretion not to be lightly interfered with and it is not enough that the appellate court would have decided matters differently. This case illustrates just how difficult it can be to challenge successfully a first instance decision on interim interdict.

Discussion

The facts here were interesting, with the third defender arguing he was merely picking up and running with the goodwill of the old White Thomson Preservation (Northern) Ltd company owned by his father, which he was effectively saying had been lying dormant in the years since his father’s company was dissolved. The suggestion was that this gave him a defence to passing off. However passing off is of course assessed on an objective basis and this argument was rejected by the Lord Ordinary.

Interim interdict applications are inevitably conducted over a short timeframe, but their impact can be very dramatic and they should always be considered as an option at the start of any IP action as a method of achieving a quick and effective result. 

Mark Cruickshank, Maclay Murray and Spens. The author acted for the pursuer and respondentn