Turbo-K Limited v Turbo-K International Limited

The court held that Turbo-K Limited (TKL) had acquired goodwill in the name and logo "Turbo-K" in England and Wales well before Turbo-K International Limited (TKIL) was incorporated and that TKIL's use of the same or a substantially similar name and logo amounted to passing off. The court applied the conventional three-part test for passing off (goodwill, misrepresentation, and damage) and found each element satisfied by reference to TKL's continuous use, OEM approvals, CEFAS ranking and sales from 1998 onwards.

TKL also succeeded in a statutory invalidity challenge to TKIL's UK trade mark No. 2582207 under the Trade Marks Act 1994: the registration was invalid under s.5(4) by reason of TKL's prior rights and under s.3(6)/s.47(1) because TKIL's application was made in bad faith. The court further found that Mr Roselli, a director and shareholder in TKIL, was personally liable for TKIL's acts of passing off on the basis that he assisted and participated in a common design to manufacture, market and sell the product under the contested name. TKIL's counterclaim for trade mark infringement against TKL and the claim against Mr Platz were dismissed.

Background and parties:

• Claimant: Turbo-K Limited (TKL). First Defendant/part-20 claimant: Turbo-K International Limited (TKIL). Fourth Defendant and TKIL director: Rony Roselli. Fourth party and TKL director: Oliver Harald Platz. The dispute concerned the name and logo "Turbo-K" used on turbine compressor cleaning fluids.

Nature of the claim and relief sought:

• TKL sued TKIL and Mr Roselli for passing off and sought a declaration that TKIL's UK trade mark No.2582207 for "TURBOK" was invalid on grounds of prior rights and bad faith (Trade Marks Act 1994 ss.5(4), 3(6) / s.47). TKIL counterclaimed for trade mark infringement and sought liability against Mr Platz for any infringement.

Issues before the court:

1. Whether TKL had goodwill in the Turbo-K name and logo in England and Wales prior to TKIL's incorporation.
2. Whether TKIL's conduct constituted misrepresentation and caused damage (passing off).
3. Whether TKIL's UK trade mark was invalid because of TKL's prior rights (s.5(4)) and/or bad faith in making the application (s.3(6)).
4. Whether Mr Roselli was personally liable for TKIL's passing off (procurement, participation in a common design or direct involvement).
5. Whether TKIL's counterclaims for trade mark infringement against TKL (and against Mr Platz) should succeed.

Court's reasoning and findings:

• The judge accepted factual evidence showing TKL had used the Turbo-K name and logo from 1998, obtained OEM approvals (including GE, Rolls Royce, Siemens) and a CEFAS gold ranking, and made substantial sales, some into England and Wales. This established goodwill prior to May 2011 (the relevant passing off date) and prior to TKIL's trade mark application (23 May 2011).
• TKIL's incorporation using the Turbo-K name, its arrangements with the manufacturer Midland, its marketing, website and brochures, and its application to register the mark were held to constitute threatened or actual misrepresentations that goods were those of (or connected to) TKL; evidence of customer confusion supported that finding. Damage to TKL's goodwill was found, including on the basis that exporting packaged goods bearing the contested get-up can constitute an "instrument of deception".
• On the invalidity challenge, the court found TKIL's UK registration invalid under s.5(4) because TKL had earlier rights protecting use of the sign by virtue of passing off. The court also found TKIL's application had been made in bad faith (s.3(6)) having regard to the knowledge and conduct of those involved in TKIL's incorporation and registration (including directors who knew of TKL's prior use and who acted in a manner falling short of acceptable commercial standards).
• On personal liability, the judge applied the Sea Shepherd / Fish & Fish common-design test and concluded Mr Roselli went beyond de minimis participation: he was a director and shareholder, signed key documents, amended marketing materials and the logo, managed website and brochures, and participated in the common design to trade under the contested name. He was therefore personally liable for TKIL's acts of passing off.
• TKIL's counterclaims for trade mark infringement against TKL and for liability against Mr Platz were dismissed.

Procedural posture: First instance decision in the High Court (Chancery Division, Intellectual Property List). The judgment resolved also the issues transferred from the UKIPO invalidity proceedings.

At first instance the court allowed the claimant's (TKL's) claims. The court found that TKL had prior goodwill in the Turbo-K name and logo and that TKIL's use amounted to passing off; TKIL's UK trade mark No.2582207 was declared wholly invalid under s.5(4) for prior rights and under s.3(6)/s.47(1) for bad faith. The court also held Mr Roselli personally liable for TKIL's passing off because he assisted and participated in a common design to carry out the tort. TKIL's counterclaims for trade mark infringement were dismissed and the claims against Mr Platz were dismissed.