When Popstars finalists “Liberty” thought the early 90’s group by the same name was a dead duck, it reckoned without the tort of passing off.
Topic: Brands
Who: Sutherland and others v.V2 Music Ltd ("Liberty")
When: January 2002
Where: Chancery Division of the High Court London
What happened:
In the spring of 2001 a new UK pop band called "Liberty" emerged. It had been one of the finalists in the "PopStars" television competition which was eventually won by the group Hear’Say. But they were not the first band to use the name "Liberty". In the late 1980’s, a funk band was formed under the "Liberty" moniker. By 1993 they had built up a dedicated following of fans, and although they were not recognised nationally and didn't have a contract with a major record company they were well respected in the funk music world. By 2001, however, the original Liberty were all but a spent force, with all the members of the band now playing with other musicians in different combos. However the band had recorded some tracks in the recent past and the residuary reputation of "Liberty" the funk band was still such that the ability of the band’s members to find work with other groups was enhanced by being able to say that they were ex-Liberty members.
It was in this set of circumstances that the "PopStars" Liberty group came to the fore, and although the "original" Liberty funk band had never registered the "Liberty" name as a trademark, they still launched legal proceedings to prevent the new "PopStars" Liberty from using that name. Their legal cause of action was "passing off". The PopStars Liberty argued that as it had been some years since the original Liberty had performed on a regular basis, they had effectively ceased to trade and lost any residual reputation they might have had. If this was right, then the "original" Liberty were bound to fail they said. This was because "passing off" will only protect a trading name if it can be shown that there is commercial goodwill attached to a business carried on under that name at the time that the passing off proceedings are started.
The original "Liberty" countered this with evidence of their continuing loyal, albeit modest fan base. They also argued that the pop music industry being what it was, their ability to make their way in the music business in the future could be irreversibly hit if the "PopStars" Liberty attracted a bad reputation for whatever reason.
The court agreed with the "original" Liberty’s arguments. Although not substantial, there was evidently a level of continuing goodwill in the original Liberty operation and this had not at any time been abandoned by the claimants. This and the danger that the new PopStars Liberty might swamp this residual goodwill persuaded the court that an injunction should be granted preventing the continued use by the PopStars band of the "Liberty" name.
Why this matters:
"Passing off" maybe a difficult tort to establish in court, and therefore a much less bankable way of protecting brands than trademark registration. As this case shows, however, it can still be a powerful weapon in the hands of those who believe they have a continuing commercial reputation to protect, even if active use of the brand has long since stopped. This latter factor makes the job of choosing new brands which are bomb-proof against legal claims especially difficult. Since the right to sue for passing off does not rely on any form of registration, there is no easily accessible central register to check. What’s more, or rather less, the standard fall-back protection of the "common law search" may not be helpful here. This sort of search involves checking telephone directories, trade catalogues, the net and other sources of information as to who might be using what trademark in the market-place. However, if active use of the trademark has ceased what is a brand selector to do? It would seem that the only options are to take a risk or to extend common law searches back over a period of say 5-10 years, if this is feasible. Only in this way might it be remotely possible to pick up "residual goodwill" on the commercial radar!
