Teal blue graphic

Goodwill - can it exist in a place of business?

A recent decision in a trade mark opposition matter in the UK Intellectual Property Office (IPO) has clarified the position as to whether goodwill can exist in relation to a place of business.

The owner of the Willow Tea Rooms in Glasgow opposed a trade mark application filed by the trust that owned the building which housed the tea rooms, and made claims that the registration of the trade mark would damage her goodwill.

The IPO's decision considered in detail whether goodwill existed in respect of the Willow tea rooms and who was the owner of that goodwill.

Willow Tea Rooms   

Since 1983, Anne Mulhern has run a tea rooms on Sauchiehall Street under the name the 'Willow Tea Rooms'. The building in which the tea rooms was housed was designed by Charles Rennie Mackintosh back in 1903 and originally served the purpose of a tea rooms run by Kate Cranston (a leading figure in the development of tea rooms in Glasgow). The tea rooms passed through to different ownership and were eventually sold in 1954 and the building was put to a number of different uses following this including a jewellers.

In 1983, following a refurbishment, Ms Mulhern re-opened a tea rooms in the building called 'Willow Tea Rooms' which has subsequently become one of the most famous tea rooms in Glasgow.  The name willow derives from the Scottish word "saugh" which means willow tree and forms part of the name Sauchiehall Street. The willow symbol was frequently used by Charles Rennie Mackintosh in his designs and particularly in the design for the tea rooms. Ms Mulhern has two registered trade marks for WILLOW (filed in 1986) and THE WILLOW TEA ROOMS (a device series mark filed in 2000).

The building in which the tea rooms is housed was bought by the Willow Tea Rooms Trust (the Trust) in 2014 and was subsequently closed for a two year refurbishment. During this time, Ms Mulhern moved her tea room business to another department store in Glasgow. In April 2015, the Trust applied for a trade mark for THE WILLOW TEA ROOMS in relation to various services in connection with the organisation of exhibitions and events and architectural and design services. This application was opposed by Ms Mulhern on the basis of her earlier rights.

Opposition

Ms Mulhern based her opposition both on the fact that she had an earlier mark registered for identical or similar goods and services and also on the basis of passing off. Ms Mulhern was put to proof of use of her earlier marks and her evidence of use was eventually accepted by the Hearing Officer (despite the fact that the actual use she had made of the marks differed slightly to the registered form, the distinctive element of her marks was held to be the words THE WILLOW TEA ROOMS).

Goodwill

The most interesting part of the matter relates to Ms Mulhern's arguments that the Trust's application for registration of THE WILLOW TEA ROOMS would constitute passing off by misrepresentation and damage to her goodwill. Ms Mulhern had filed evidence in support of her ownership of the tea room business named THE WILLOW TEA ROOMS. In response to this, the Trust argued that it was the owner of any goodwill as the owner of the building and any goodwill in the name THE WILLOW TEA ROOMS was associated with the historical nature of the building having been designed by Charles Rennie Mackintosh and not with the business carried on inside the building.

These arguments were roundly rejected by the Hearing Officer in her decision in which she confirmed that goodwill can only exist in relation to a business or trade. The Hearing Officer referred back to the case of Inland Revenue Commissioners v Muller & Co’s Margarine Ltd [1901] AC 217 in which Lord Lindley stated that "Goodwill regarded as property has no meaning except in connection with some trade, business, or calling… In this wide sense, goodwill is inseparable from the business to which it adds value." The Hearing Officer went on to explain the difference between goodwill and reputation by clarifying that reputation is more of a matter of fact. She confirmed that "reputation can exist without a supporting business, but goodwill can only exist via business or trade" and that "a building per se cannot have goodwill because goodwill can only exist if there is something to buy, to generate custom…" This meant that "the applicant [the Trust] cannot lay claim to goodwill on the basis of the architectural reputation of the building on its own".

As such, Ms Mulhern was successful in her opposition against the registration of THE WILLOW TEA ROOMS mark by the Trust in relation to various services relating to the organisation of commercial exhibitions and events (although she failed in relation to those services related specifically to architecture and design).

Comment

This decision serves as a useful reminder as to the requirements for the existence of goodwill and confirms that this cannot exist solely in respect of a place of business or the building in which a business is housed. Businesses should take note of this, especially where they might be located in a building of particular historical or architectural note.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2017. Specific advice should be sought for specific cases. For more information see our terms & conditions.


Insights & events View all