Juthika Bhayani & Bhayani Law Limited v Taylor Bracewell LLP [2016] EWHC 3360 (IPEC)[2016] EWHC 3360 (IPEC)

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This case involves allegations of passing off against the Defendant relating to its use of the sub-brand “Bhayani Bracewell” and a revocation action against the Defendant’s “BHAYANI BRACEWELL” trade mark. The action was brought in the High Court in January 2016 and transferred to the IPEC in that same month. This decision relates to a summary judgment hearing, where applications for summary judgment were brought by both sides.

The first claimant ("Ms Bhayani") is a solicitor who has practised in South Yorkshire for about 23 years, specialising in employment law. Ms Bhayani has never practised as a sole practitioner. Before she joined Taylor Bracewell she worked at a firm called Watson Esam, initially as an employee and then as an equity partner from 1996 to 2011.

Taylor Bracewell, the Defendant, is a firm of solicitors in South Yorkshire. In 2011 the partners of Taylor Bracewell wished to expand the employment law side of their business. Ms Bhayani was invited to join Taylor Bracewell as a partner and on 1 April 2011 she entered into a contract of employment with Taylor Bracewell. On the same date Ms Bhayani also entered into a limited liability partnership with Taylor Bracewell. Part of the partnership agreements between Ms Bhayani and Taylor Bracewell was that the firm would offer services under the name 'Bhayani Bracewell'. This side of the business was centred on employment law services supplied by Ms Bhayani from an office in Sheffield.

Additionally, in February 2014, Taylor Bracewell filed an application to register a UK trade mark for the words “BHAYANI BRACEWELL” in stylised form (the “Trade Mark”). The Trade Mark was registered in respect of legal services among other things.

Ms Bhayani spent three and a half years at Taylor Bracewell, but in October 2014 Ms Bhayani left the firm and in November 2014 she set up the second claimant ("Bhayani Law") which is a company that offers legal services, specialising in employment law.

For a time Taylor Bracewell continued to offer services relating to employment law under the 'Bhayani Bracewell' name without Ms Bhayani. Ms Bhayani objected and issued proceedings. The claimants alleged that by use of the 'Bhayani Bracewell' name Taylor Bracewell falsely represented that Ms Bhayani was still involved with their business and had passed off its services, particularly its employment law services, as being those of Ms Bhayani. The claimants also seek revocation of the Trade Mark pursuant to s.46(1)(d) of the Trade Marks Act 1994 on the ground that the use made of it by Taylor Bracewell is liable to mislead the public.

Taylor Bracewell denied passing off and denies that the Trade Mark is invalid. Taylor Bracewell denied that either claimant owns any relevant goodwill. Separately, Taylor Bracewell also relied on the successive partnership agreements and says that any goodwill there may be associated with the Bhayani Bracewell trading name is retained by Taylor Bracewell under the terms of those agreements, and they are permitted by those agreements to register and use the Trade Mark.

Goodwill, the first limb of the passing off "trinity", was the primary focus of the hearing. It was accepted that Ms Bhayani had acquired a reputation in the field of employment law. However, reputation is not the same as goodwill and on its own is not sufficient to found an action for passing off. So, whilst an individual partner may have a professional reputation, it does not follow that they own the goodwill in their name.

Generally, goodwill generated by the acts of an employee will be vested in the employer. Similarly, where an individual works in a partnership the goodwill generated by his or her acts will in the normal course vest in the partnership. However, this is not a hard and fast rule of law, and on certain facts an employee or partner can generate goodwill of their own, distinct from that of the employer or partnership.

The Claimants argued any person who acquires a reputation by carrying out acts under their own name, real or otherwise, generates actionable goodwill on which they can personally rely. However, the Judge said that this would fly in the face of the general rule. The Judge accepted that the general rule does not apply to goodwill generated by acts done outside duties to the employer or partnership, such as in Irvine v Talksport – but in Irvine there was no relevant entity other than Mr Irvine known to the public and therefore no entity other than him in which goodwill could vest, and this set of facts did not apply in this case.

In this case, the professional acts carried out by Ms Bhayani which have earned her reputation were done either in the course of the business of Watson Esam or that of Taylor Bracewell. There were no other candidates for a relevant business. Leaving aside sole practitioners, the public are well aware that a solicitor, whether employed or an equity partner, is not a free agent. His or her performance will be both assisted and constrained by the terms of employment or partnership and by the advice and pressure exerted by colleagues. Ultimately the quality of services of any individual solicitor is guaranteed by the firm. If the quality fell short, any compensation would be available from the firm, not the individual solicitor.

Subject to very unusual facts, the general rule will apply: the goodwill vested in Watson Esam and Taylor Bracewell, not Ms Bhayani. Accordingly, the Judge found that Ms Bhayani had no realistic prospect of establishing that in law she owns goodwill on which to base a case of passing off against Taylor Bracewell. Further, in analysing the partnership agreements, the Judge concluded that irrespective of the law of passing off, the combined effect of these partnership agreements was that the goodwill generated by Ms Bhayani during her time at Taylor Bracewell belonged to Taylor Bracewell.

In respect of the revocation action against the Trade Mark, it was argued by the Claimants that the Trade Mark was likely to mislead the public because its use by Taylor Bracewell is likely to lead members of the public to believe that Ms Bhayani is still associated with that firm. Taylor Bracewell's pleaded position was ambivalent because it claimed to have stopped using the name (except for historical references that will come to an end), but also claims that it is licensed to use the Trade Mark under the partnership agreements.

In practice, that left Taylor Bracewell's argument that it retains the contractual right to use the 'Bhayani Bracewell' trading name and thereby the Trade Mark. The Judge was not satisfied that it necessarily follows that Taylor Bracewell's use of the Trade Mark would not engage s.46(1)(d) of the Trade Marks Act 1994. As such, Judge Hacon found that the Claimants’ claim in respect of the revocation of the Trade Mark has a realistic, as opposed to fanciful, prospect of success at trial.

Judge Hacon therefore ordered that judgment be entered in favour of Taylor Bracewell in respect of the passing off issue; and he would hear the parties’ position on how to proceed on the other remaining issues.

The main issue in this case is how the Judge analysed the job and role of solicitors/partners in a law firm and whether that role gave rise to any reasons why he should treat a Partner like Ms Bhayani differently to the general rule in terms of where goodwill vests. The Judge analysed Ms Bhayani’s role and found that, save for unusual facts, the goodwill generated by a solicitor’s work will vest in the firm because the position and role of a solicitor is underpinned by his or her firm, colleagues and the employment contract.

It is also worth noting that the Judge said that if a solicitor were to move firm then the goodwill would begin to vest anew in that new firm, and the new firm would have a cause of action against the solicitor’s old firm if that firm had continued to represent in some way that the solicitor was still working for them.

Link to Judgment

Judgment Date: 22 DECEMBER 2016

Goodwill in a solicitor’s name will usually vest in the firm