IP-2023-000120 - [2025] EWHC 1793 (IPEC)

The Defendants had accepted that some goodwill had built up in the Restored Company, at least in the period up to 2012, however, for the reasons set out above it cannot be relied on by NHBCL. There was evidence of invoices to Organic Hill and social media and other evidence in the period up to June 2017 but again for the reasons set out above that cannot be relied on.

The burden of proof rests with NHBCL which was of course uniquely placed to know what evidence it had to support its claim to have goodwill in its business arising from its use of the Logo and the Brand Name.

The Claimants argued that the Logo and the Brand Name on the Claimants’ Bag had become associated in the minds of the relevant public and therefore the goodwill was valuable and substantial. Mr Marshall reminds me that this is an IPEC case and these are modest companies. But there still has to be some evidential basis for a claim advanced and where, as here, the Defendants have put the Claimants to proof in relation to certain matters that cannot be ignored.

Even if NHBCL can overcome the effect of the dissolution, there was, however, little evidence of NHBCL’s trading activity in relation to the Logo, Brand Name or the Claimants’ Bag in the period 2018 to late 2022.

I have identified three disclosed invoices to wholesalers/stockists in the trial bundle for the relevant period. One to Mark Barr in September 2022 for 640 bags, one to Paul & Pesi Lau in June 2022 for 40 bags and one to 210 Portobello Souvenirs in May 2022 for 418 bags. However, as set out below this is deceptive. There is no way of knowing from those three invoices what bags were in fact included and whether or how many were the Claimants Bag. Mr Marshall complains that the late disclosure which I refused to permit would have provided further evidence of trading and sales.

Although there was evidence of the deliveries from the suppliers and sales to the stockists there was no evidence of a single sale of the Claimants’ Bag directly to a member of the public/customer in the UK between 2018 and 2022 or indeed at all. NC-S and CA accepted that there was no such evidence at all let alone for that period.

Whilst the sale of goods to the stockists/wholesalers and consequently on to the public may generate goodwill, NHBCL cannot rely on the onward sales in respect of Organic Hill. In fact, for the period 2018 to 2022 the Organic Hill invoices had not been produced.

There were two invoices from suppliers in the period August 2018 and January 2019 and then two in May 2020.

Dr Muir Wood submitted that since the evidence of shipping from the suppliers in India did not include images of the bags that were being shipped there was in fact no certainty that they were the Claimants’ Bag and not some other bag that did not bear the Logo or the Brand Name. There was something in this point.

The images of the Claimants’ Bag relied on do not always show the Logo and the Brand Name. When challenged about this in cross examination CA insisted that the Claimant’s Bag always included the Logo and Brand Name on one side with a design on the other.

Whilst in principle I am prepared to accept CA’s evidence that the Claimants’ Bag he sourced and sold through NHBCL were two sided with an image of something on one side and words on the other side in fact not all the bags were the Claimants’ Bag. The documentary evidence he relied on demonstrates that the bags sourced from the suppliers and/or therefore sold to the wholesalers were a range of products and not all the Claimants’ Bag. They will not therefore always have featured the Logo. This is clear from the supplier invoices and from CA and NC-S’s evidence.

CA’s own evidence makes clear there are other tote bags. In CA1 at [22] he explains that he sometimes sold NT the Claimants’ Bag and sometimes other tote bags. This was between 2020 and 2022.

The invoices from the suppliers in 2018 and 2019 describe cotton and jute bags covering a number of other areas of London or sights of London not obviously connected with Notting Hill such as Oxford Street, Covent Garden, Piccadilly Circus and the like. It was not immediately obvious that they would feature the Logo relied on in these proceedings. It seems likely therefore that there were other combinations which were very unlikely to have featured the Logo.

The existence of other types of bags was consistent with CA’s evidence in which he explained that he introduced a range of designs for other areas of London including Camden Town into his store using the same style in October 2018. From at least October 2018 therefore NHBCL was diversifying its stock. This would tend to suggest that at least a proportion of the supplies received by NHBCL would not be the Claimants’ Bag as relied on in these proceedings.

By 2020 the invoices from the suppliers were even less helpful referring to design numbers. It is impossible to tell from those design numbers which type of bag each design relates to. Given the evidence that some of the supplies relate to bags that are not the Claimants’ Bag that does not assist in establishing goodwill.

This raises further questions about what was actually supplied to the stockists/wholesalers. The three invoices referred to above described the goods as “Cotton bags” and “Cotton bags MIX”. It is impossible to discern from that description whether any or all of those few 100 bags were the Claimants’ Bag rather than another design.

This was not addressed at all in the evidence and leads me to treat with considerable caution the reliance on the suppliers’ and wholesalers’ invoices as evidence that establishes goodwill in the business connected to the Claimants’ Bag, the Logo or the Brand Name.

There were screenshots of the website including using the Way Back machine and there was evidence of limited social media activity.

The POC at [24] explains that as at the date of issue of this claim the Instagram account set up by NC-S on 29 November 2015 had 923 followers when the claim was issued. As at June 2023 the Instagram account had 798 followers an increase of 125 followers in 6 months but all after any relevant date. It is clear that following the discovery of the Defendants’ Bags in early 2023 there was considerable activity. For the purposes of the establishing goodwill in the business by November 2022, NC-S fairly accepted that it was not possible to identify when the followers started to follow the Instagram account and/or where they were.

Additionally, of course, there is no means of assessing how many of the 798 became followers before 10 April 2018 or after November 2022 but on any basis a total of 798 followers over a period of 7-years (2015 to 2022) does not establish goodwill or reputation. Those who joined pre-dissolution are likely to be part of the destroyed goodwill of the Restored Company even if they remain followers now. They would have to be excluded from any assessment of the goodwill accruing to NHBCL.

Being generous and dividing the followers roughly equally across the 7-years when in reality there would more likely have been an initial surge and a recent surge that would give a potential of say 450 followers over the period 2018 to 2022 for the purposes of establishing goodwill. As set out below the followers do not appear to be active which raises another question of the weight or value to be given to the Instagram account for the purposes of establishing goodwill.

The Facebook account had 216 followers by the time of issue at the end of 2023 and 205 in June 2023. The Facebook account provides even less evidence to establish goodwill. It was set up in November 2013 so had been in operation for 10 years by the time the claim was issued and had gained 11 new followers between June and November 2023. Working from the June figure and again being generous and simply dividing it roughly equally across the years that would allow for say 20 new followers a year so 80 to 90 over the period. Again, those who joined prior to the dissolution are likely to be part of the destroyed goodwill of the Restored Company. Again NC-S accepted that it was not in fact possible to identify who had joined or when or where they were.

Mr Marshall argued that given the nature of the claim it would not have been proportionate or reasonable to have required the Claimants to have chased down the geographic location evidence but that is only one element of the problem.

Much of the social media was what one might loosely call “marketing” in that it related to social media posts by the Claimants rather than independent social media posts. The focus of this social media was either pre 2018 or from late 2022 onwards neither of which period were of assistance in establishing goodwill in the business in the period 2018 to 2022.

The posts from the Instagram account demonstrate very very low usage. On the evidence available the vast majority are posts by NHBCL. Dr Muir Wood had counted 10 independent ones. NHBCL has disclosed evidence of 4 posts in 2018 – three of which were after 10 April. In 2019, 2020 and 2022 there were 5 posts each year. The disclosed posts on the Facebook account all pre-date April 2018.

The website for which there were a number of pages produced from the Way Back machine on various dates did not advance the Claimants’ position any further. The mere existence of a website albeit branded was not evidence of goodwill in the business. There is no evidence of any direct sales made through the website during the relevant period and no evidence about the activity or use made of it. It ought to have been possible to have provided statistics about the number of visitors to the site for example and/or whether any sales had been made through it. I note that in June 2017 NC-S had been able to tell CA that she had 1 – 3 orders a week through the website.

I am not satisfied that the evidence available enables me to find that NHBCL has established goodwill and reputation in its business. Whilst the threshold is not high it is not even clear on the evidence available that NHBCL can actually demonstrate a single sale involving the Logo on the Claimants’ Bag even through its wholesalers given the lack of clarity about what the wholesalers were being sold. CA and NC-S accepted there was no evidence of a single sale to a member of the public. The supplier evidence clearly includes tote bags which do not bear the Logo, and the social media evidence goes nowhere.

This may be an IPEC claim but there needs to be something on which to base a finding of goodwill.

Other evidence relied on by NHBCL to support its claim to have generated goodwill relied on turnover said to be attributable to the Claimants’ Bag and a marketing budget rather than any actual marketing or advertising spend for the years from 2018 to 2022. This was set out in POC at [26] and [27]. The turnover was said to have risen from £30,201 in 2018 to £57,815 in 2022 with a significant dip during Covid. The marketing budget was said to be £1000 per annum. The Defendants did not admit the turnover and marketing budget figures and put the Claimants to proof.

There was no explanation in CA’s witness statement about these figures and no accounting information had been produced. There is no evidence of the total turnover of NHBCL to enable any assessment to be made about the sums he said were attributable to the Claimants’ Bag rather than any of the other products sold by NHBCL. Given the evidence produced in relation to the Restored Company including its accounts this was surprising. It was not even part of the refused late disclosure.

There is no explanation as to whether these figures included all the sales to Organic Hill, but this seems likely given that NHBCL only conceded the position in relation to Organic Hill in closing. This is likely to substantially reduce any relevant turnover for the purposes of establishing goodwill. There is no evidence of any marketing activity between 2018 and 2022 for which the marketing budget might have been used (see for example the limited use of social media above). CA accepted he had provided no evidence to prove the figures.

The Claimants had been critical of the Defendants in respect of their financial evidence (see above), and I agree that it was not credible. The Claimants cannot on the one hand rightly complain about the Defendants and then seek to argue that I should not apply the same standards to the Claimants’ evidence. Whilst this is an IPEC claim the Claimants had been put to proof on the turnover and marketing budget and had provided no evidence at all. It is not enough in those circumstances to say that the POC was signed with a statement of truth.

As set out above the goodwill which had accrued to the Restored Company was destroyed on dissolution, any goodwill belonging to Organic Hill remains with Organic Hill which continues to sell the Claimants’ Bag bearing the Logo.

All that remains is the period 2018 to 2022. Whilst a modest level of goodwill can be sufficient, I am not satisfied that the evidence establishes goodwill in the business related to the Logo and the Brand Name and the Claimants’ Bag between April 2018 and November 2022.

As set out above goodwill is a gateway requirement to be able to sustain a claim in passing off. I am not satisfied that NHBCL has been able to establish goodwill in its business for the relevant period.