Not in my name!
When the family at the heart of a business falls out, who gets to use the family name?
One of the greatest and most precious assets of a family business is often the name of the family that owns it.
As we heard at the recent Northern Family Business Conference in Leyburn, clients or customers often feel that they have a "relationship" with the owners of a business whose goods or services they buy at least partly because they carry the same family name that the customer has dealt with, sometimes for generations.
So when a family who are in business together fall out, and go separate ways, often wanting to continue in similar or related business ventures, can the "outgoing" member(s) of the family business use that family name and continue in business under it?
In this article, I will look at what happened in three especially high-profile cases under just these circumstances, and try to draw some conclusions from them about the use of the "Own Name" defence afforded by s.11(2) of the Trade Marks Act 1994. The section (which derives from equivalent European legislation) says that "a registered trade mark is not infringed by the use by a person of his own name or address provided the use is in accordance with honest practices in industrial or commercial matters."
The first of these involved the Cipriani family, whose patriarch Giuseppe Cipriani, together with members of the Guinness family, opened the now-famous Cipriani Hotel in Venice in the 1950s. Before opening the hotel, Signor Cipriani had also opened the equally famous Harry's Bar in Venice. The Hotel was subsequently sold by the family to the Orient Express Group, including the exclusive use of the "Cipriani" name except for venues already owned at that time by members of the Cipriani family. Not surprisingly, Orient Express Group registered a Community Trade Mark for "Hotel Cipriani."
The Cipriani family went on to build upon the success of Harry's Bar by opening a series of high-end restaurants around the world, and in 2004 opened a restaurant in London called 'Cipriani London'. The restaurant was operated through an English company, Cipriani (Grosvenor Street) Ltd. The sole director of that company was Signor Cipriani's grandson, Giuseppe Jnr.
Hotel Cipriani sued both Cipriani (Grosvenor Street) Ltd and Giuseppe Jnr. Personally. They in turn attempted to defend the claim on the basis that the company and Giuseppe Jnr. were using their "Own Name." However, Hotel Cipriani successfully obtained an injunction restraining use of "Cipriani" in relation to restaurants.
The Judge in the High Court found that the company's name was not "Cipriani" or even "Cipriani London"; it was "Cipriani (Grosvenor Street)" which was not the brand being used for the restaurant, and so the defence fell at the first hurdle in respect of the company. Whereas, although "Cipriani" is Giuseppe Jnr's "Own Name," crucially it was the company and not he personally which operated the restaurant, and so the defence was not available to him at all. The Court of Appeal later agreed.
Two other London restaurants operated by companies owned by the Cipriani family were subsequently restrained by the injunction obtained in this litigation from using sub-brand text such as "by G. Cipriani" relying on the "own name" defence because, once again, it was not G. Cipriani himself who was operating the businesses, he was providing his name to be used as part of the branding used by two separate group companies.
Gunning for the family
Our second case involves the Asprey family, and the title of the case, Asprey & Garrard v WRA (Guns) Ltd (t/a William R Asprey Esq) gives a flavour of what is to come. The Claimant was a long established family jewellers business which had traded since a 1995 merger as Asprey & Garrard. The founder of the Defendant company was a family member, a direct descendant of the founder of the company, who had worked in the business for 9 years, and for the 3 years before he left the business had run their gunroom. In 1999 he left to set up his own business specialising in guns, and trading under the name William R Asprey Esq. He sold many products featuring the name "Asprey" (for which the Claimant held various trade marks) and even set up a shop close to the his former employer and family business, in the West End. He made much in his promotional materials of his descent from the original William Asprey who had founded the jewellery dynasty.
Unsurprisingly, the Claimant sued for trade mark infringement and passing-off, and the Defendant sought to rely on s.11(2) of the Trade Marks Act - the "Own Name" defence and on various disclaimers that he had made in his shop window and elsewhere seeking to make clear that he was not the same business as his former employer up the road.
The Court, giving swift summary judgment in favour of the Claimant, reiterated that an individual was entitled to carry on his business under his name, provided he did not do anything more than that to cause confusion with the name of the business of another and so long as he did so honestly. The defendant, by continuing to use the name, despite instances of proved confusion, had made deceptive use of the name "Asprey" (the Judge held) and therefore had no arguable defence under section 11(2). As in the Cipriani case, the Court also held that "Asprey" was not in fact the "own name" of the Defendant's company, operating his gun business.
The Judge considered the extent to which the Defendant, Mr Asprey, had relied on promoting his business on the basis of being a "7th generation Asprey." The Judge held that he was entitled to say that, and to be proud of his heritage in business, but that it was extremely difficult to say these things whilst at the same time being quite unambiguous that he was no longer connected with Aspreys (the Claimant). Despite Mr Asprey's efforts to avoid confusion the Judge decided that what he had done was on the wrong side of the line and stressed that disclaimers will almost never be wholly effective at preventing a passing-off claim unless they were "massive and omnipresent," which most business owners would prefer to avoid.
King of clubs?
Our third and final case also takes place within London West End society. Robin Birley is the son of the late Mark Birley, who founded several well-known London clubs and restaurants including Annabel's, Mark's Club and Harry's Bar (not to be confused with the one in Venice!). Robin Birley was involved in the management of these businesses until a family falling-out in 2006 led to his dismissal and disinheritance. The businesses were sold to Mr Richard Caring in 2007 by Birley senior, shortly before his death.
Robin Birley began developing a new Mayfair club, and wished to use his own name in connection with it. However, he made claims in the press that he had been have been warned off from so doing by the "ownership" of that name by Richard Caring. Mr Caring's company owned a UK Trademark Registration for Birley/Birley's in respect of nightclub and restaurant services, dating from July 2007, when he acquired the business from Robin's late father.
Interestingly, Robin Birley's company had filed an application for the same trade mark 24 hours after Mr Caring's mark was filed. Robin Birley's mark was also registered but later surrendered following proceedings brought by Caring, and a second application by Birley for his full name Robin Birley as a registered trade mark also failed.
It would therefore appear that use by Robin Birley of the mark Birley in relation to nightclub services would inevitably constitute trade mark infringement. However, could he rely on the defence provided by s.11(2)?
At first sight Mr Birley's planned use of the mark would have appeared to be exactly within the section's scope. Not only is Birley his own personal surname but he has also traded under the company name Birleys Limited.
In the Cipriani case, the s.11(2)(a) defence failed because the defendant was using the name "Cipriani" rather than its own full registered company name. There had also been a similar finding in the Asprey case.
Whether Mr Birley could mount a successful defence in any infringement proceedings would therefore depend on him being able to show that he "was acting in accordance with honest practices." The test of honesty is an objective one. There is a duty to act "fairly" in relation to the legitimate interests of the trade mark owner. The Court would have to carry out an overall assessment of all the circumstances taking into consideration, in particular, whether the defendant might be regarded as competing "unfairly" with the trade mark owner - as was the case in Asprey.
In the event this dispute was not subject to reported proceedings, though it substantially delayed Robin Birley's plans to return to London club ownership. However, Mr Birley did go on to own another London Club, albeit taking as its name its own location, 5 Hertford Street.
So what conclusions can we draw from cases such as these? The Courts have shown that they will construe the limits of the "Own Name Defence" very tightly, and this is probably right where a registered trademark using or incorporating that name has been obtained - otherwise it diminishes the value of such registered rights. When family members disagree or move into separate businesses, the best advice is almost certainly that "prevention is better (for which read easier and less costly) than cure" and thought should be given by both sides of the family about recording in some form of agreement what (if any) rights are to be negotiated for the outgoing family member in terms of the name. Might they, for example, be entitled to use it in particular fields of enterprise, or only within (or outside) particular geographical bounds? Such co-existence is possible but requires thought and advice at the outset in preference to costly disputes and litigation later.
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.