Contractors’ Questions: Can I sue a copycat contractor?
Contractor’s Question: I run a small software company as my Plan B. I initially took on a contractor for some temporary development at the start, but he left and subsequently set up a similar business. In fact, his limited company’s name and logo are so similar to mine that I believe he might have infringed my trademark. Can I take legal action and, if I do, what are my chances of actually being compensated?
Expert’s Answer: Firstly, you say you believe an infringement may have occurred.
The Trade Marks Act 1994 (s.10 (2) (b)) provides that: “A person infringes a registered trade mark if he uses in the course of trade a sign where becausethe sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered,there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark.”
Therefore, you could bring a claim for infringement of registered trade mark, assuming, of course, that your name and/or logo are registered trade marks.
If your marks are not registered, you could bring a claim for passing off. To succeed in an action for passing off, you would need to show that:
- your services have acquired goodwill in the market and are known by the marks used;
- there is a misrepresentation by your former contractor (C) leading or likely to lead the public to believe that services offered by C come from or are connected with you; and
- you have suffered or are likely to suffer damage as a result of the erroneous belief engendered by C’s misrepresentation.
It is clearly more difficult to succeed in a claim for passing off than trade mark infringement. Hence, it is advisable to register a trade mark.
You may also have a claim for infringement of copyright if C has copied your logo.
If you can prove that you have lost sales as a result of customers dealing with C’s new business as a result of his use of your intellectual property (IP), you should be awarded damages to compensate you for your loss of profit on those sales.
If you cannot prove such losses were caused by C, you could elect for an account of the profits made by him by his use of your IP.
Even if you cannot prove that you have lost any sales or that C has made any profit as a result of his use of your IP, you may still be awarded the fee which he would have had to pay you to use your IP -i.e. a reasonable royalty.
Whether you recover those damages is, however, a different question. That depends on the ability of C and his new business to pay. Before commencing litigation, you should satisfy yourself that C is likely to be able to pay the amount you expect to recover. There is unlikely to be any financial information available on his new company. As regards C himself, you could conduct bankruptcy and county court judgment searches and use a private investigator to find out what he can about his financial position.
Often compensation is not the primary remedy in cases such as these. The claimant’s main objective is often to stop the Defendant using its name and logo. You could do that by obtaining an injunction from the court. Alternatively, you could object to Companies House if C’s company name is too similar to your name. If it is, Companies House will order C to change the company’s name. Companies House can, however, do nothing about the logo.
The expert was Mark Lewis, partner at IBB Solicitors.
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