Laura Thurgood v Danielle Laight & Anor

Goodwill may arise in a trading sign where it is used in trade as an indication of source, even if another sign is used alongside it. Goodwill generated by an employee or independent contractor in providing services belongs to the business proprietor, unless the facts establish otherwise. Misrepresentation is established where an identical sign is used for identical services among the same customers in the same territory, and the court need not receive evidence from an individual customer who was deceived. Damage may be inferred where the misrepresentation diverts customers and materially harms the claimant’s business.

Laura Thurgood brought a passing-off claim against Danielle Laight and Wash Wiggle & Wag Limited concerning dog-grooming services in the Redditch area. Ms Laight had worked as an independent contractor in Ms Thurgood’s business, which used the sign WASH WIGGLE & WAG. After leaving, she incorporated the second defendant and traded under the same sign, including by using social-media pages associated with Ms Thurgood’s business.

The issues were whether Ms Thurgood owned goodwill in the sign, whether the defendants’ use constituted a misrepresentation, and whether it caused damage. The trial concerned liability only.

1. Goodwill. The claimant’s use of WASH WIGGLE & WAG on the grooming van, in advertisements, and on social-media pages was use in trade of a non-descriptive sign indicating the source of the services. That use generated goodwill in the sign within the relevant territory. The simultaneous use of SCRUFFY2FLUFFY did not prevent WASH WIGGLE & WAG from acquiring goodwill.
2. The goodwill belonged to Ms Thurgood’s business. Ms Laight’s work as an independent contractor, and her personal relationship with some customers, did not give her ownership of the goodwill generated by the services she provided within that business. The court also rejected the contention that use of other business names prevented customers from recognising WASH WIGGLE & WAG.
3. Misrepresentation. Ms Laight’s adoption of the identical sign for identical dog-grooming services, directed at the same customers in the same territory, constituted a misrepresentation. Customers would understand that there was a connection in the course of trade between the defendants’ services and Ms Thurgood’s business. It was unnecessary to produce an individual customer who had been deceived.
4. Damage and disposition. The evidence showed that customers had been diverted from Ms Thurgood’s business and that customer numbers fell dramatically. The court rejected the alternative explanation that the business collapsed because of poor customer service. Sufficient damage was established for passing off.

The claim for passing off was established against both defendants, who were jointly and severally liable in accordance with their admissions.