An appeal has been allowed against an IPEC judgment striking out defences to a passing off claim based on issue estoppel and abuse of process. The decision is the latest instalment in a dispute between feuding members of a musical group following their split in 2016.
Background
Between 1986 and 2016, Ian and Winston Thomas (and others) were members of a musical group, or ‘sound’, known variously as ‘LOVE INJECTION’ or ‘LUV INJECTION’.
Following their split, Ian (and others) performed under the names ‘LOVE INJECTION’/‘LUV INJECTION’. Winston (and others) also performed under the name ‘LUV INJECTION SOUND’. The dispute arose out of Winston’s application to register ‘LUV INJECTION SOUND’/‘LOVE INJECTION SOUND’ as trade marks. The first application was granted, but Ian opposed the second (and sought to invalidate the first) on the grounds of passing off and bad faith.
Both grounds succeed at the UKIPO based on the hearing officer’s findings that:
- The sound was 'an unincorporated association and a partnership at will' before the split.
- Up until that point, the goodwill in the name resided in the sound’s members, including Ian.
The hearing officer declined to comment on ownership of goodwill after the split, save to find that Winston alone was not entitled to it.
Ian subsequently issued a passing off claim in the IPEC. Winston counterclaimed that the goodwill belonged to him and it was Ian who was passing off. Alternatively, Winston forwarded the defences that by the time of the claim the names had come to designate his and Ian’s separate businesses (rather than the partnership) or, if the name continued to designate the partnership, the same should be dissolved and its assets (including the goodwill) disposed of between them. Ian applied to strike-out Winston’s defence based on estoppel and abuse of process.
In her judgment, HHJ Clark held that there was no res judicata and no cause of action estoppel in the opposition proceedings. However, since passing off had been raised in the invalidity proceedings, she was satisfied that issue estoppel had arisen from these. Most of Winston’s defence was struck-out.
Court of Appeal Decision
Lewison LJ, whom delivered the lead judgment, considered the leading authorities on issue estoppel. Ian had succeeded before the hearing officer on two grounds (passing off and bad faith), giving rise to two questions:
- Where a decision was made on more than one ground, which ground created an issue estoppel?
- If no appeal was possible on one only of those grounds, did that affect the question of whether there were special circumstances which would permit a party to challenge what would otherwise amount to an estoppel?
Assuming it was possible for each ground to give rise to an issue estoppel, the determination of the issue relied on had to have been necessary for the first court’s decision and not collateral to it. The fact that Winston could not have appealed separately against the hearing officer’s decision pointed to the conclusion that no estoppel had been created. It may also be a ‘special factor’ permitting a challenge to at least one of those grounds.
Further, the hearing officer failed to appreciate the distinction between a partnership and an unincorporated association. On the facts, the goodwill in the sound’s name was partnership property and, on the partnership’s dissolution, both brothers were entitled to ask for the partnership assets to be realised and divided between them. The only finding made about the ownership of the goodwill following the split was that it did not belong to Winston alone. Anything else decided was collateral to that finding. Accordingly, Winston should be permitted to forward his alternative defences.
Comment
The case provides a useful overview of issues to consider in a case of issue estoppel and abuse of process. It also serves as a reminder of the danger of leaving issues of ownership to be decided only after members of a band have decided to go their separate ways.
This article was written by Chloe Perea Poole and first appeared on WTR Daily, part of World Trade Mark Review, in June 2021.
For more information or if you have any questions, please contact Chloe Perea Poole or Jeremy Dickerson, or your usual IP team contact
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