Directors Defence Blown Apart in Trade Mark and Passing Off Claim

A company director has been found jointly liable for trade mark infringement and passing off in claim brought about by a company specialising in sports performance and nutrition.

Background

The claimant, Grenade UK Limited, was launched in 2010 and since that time has sold sports nutrition products to over 100 countries. The products are used mainly by professional athletes and fitness enthusiasts.

In 2010 the defendant, Grenade Energy Limited, started to sell goods under their company name.  The goods were advertised on Grenade Energy's website and were aimed at the fitness and nutrition market and included an energy drink called EPIC to restore vitamins and nutrients.

The claimant owns EU Trade Mark Registrations for GRENADE as a word mark and a logo mark containing the word GRENADE in a stylised font, with an image of a grenade in place of the A in respect of food and dietary supplement for sports and performance enhancement.

The claimant alleged trade mark infringement and passing off and applied for summary judgement and further claimed that the company Grenade Energy Limited and the sole director of the company were jointly liable.

Defendants' Arguments / Defence

The defendants admitted trade mark infringement but argued that all three elements necessary to make a successful claim for passing off: (1) goodwill in the mark, (2) there has been a misrepresentation on behalf of the defendant, and (3) the claimant suffered damage, were not present.  They argued that in this case there had been no damage to the claimant.

The defendants also argued that the sole director should not be jointly liable for infringement and passing off.

Decision 

The Intellectual Property Enterprise Court held that both the company and company director were jointly liable for trade mark infringement and passing off.

The claimants produced evidence of actual confusion between the marks and the judge held that even if the claimant had not suffered damage through lost sales there would have been a loss of goodwill.

Company Law – Joint Tortfeasor

In company law the principle is that a company is a separate legal entity from the directors (and shareholders) of the company.  However, if a director has acted as a joint tortfeasor they can be held jointly liable for acts of infringement and passing off committed by the company.

To be considered joint tortfeasors two parties must act together in committing an injury.

In order to be jointly responsible a director must have "knowing, willing or a wilfulfully" carried out the acts complained of.

In the instant case the defendant director was the sole director of the company and was wholly responsible for all of the decision making. The judge concluded that the defendant director acted wilfully and knowingly in infringing the trade mark and passing off his goods as those of the claimant and because he did not identify any other parties involved in the decision making he was a joint tortfeasor and accordingly was also responsible.