15 October 2014

Who owns the trading history of a company?

The Advertising Standards Authority (ASA) is the independent regulator responsible for holding UK advertisers accountable for breaches of the relevant advertising codes of practice.

Today it published its adjudication on a complaint relating to the comparison site uswitchforbusiness.com, and in particular claims on the website that:
"uSwitchforBusiness has saved money for tens of thousands of businesses ... We've helped businesses of all shapes and sizes, so we've got plenty of experience when it comes to comparing the market and understanding how to find the best prices on offer."
The complainant, Business Juice Ltd, who had previously operated as uSwitch for Business and had provided the service, challenged whether the claims were misleading.  

The full facts are unclear from the decision, but it appears that one of the key issues was the trading history of the business between 2007 and January 2011.

There are several UK trade mark registrations for USWITCH that are owned by uSwitch Ltd. It appears that between 2007 and 2011 the trade mark was licensed to a company called Make it Cheaper who operated the uSwitchforBusiness brand (not a registered trade mark). In its response to the ASA complaint, uSwitch Ltd stated that:
"... from 2007 to January 2011, when the brand was operated by uSwitch Ltd and fulfilled by Make it Cheaper, they had helped 30,025 customers switch supplier. They said that at the heart of brand/trade mark law, was an understanding that goodwill and reputation accrued as a consequence of trading history, regardless of which legal entity (or company) that traded under the brand at a given time. They believed therefore that work carried out would accrue to a trademark and that the change in licensee did not impact on a brand's goodwill. They believed the trademark owner could therefore be said to 'own' the trading history. They believed this was supported by the fact the business customer would have interacted with the brand and not the operating entity."
The ASA did not uphold Business Juice's complaint and ruled that:
"because, from 2007 to 2011, the brand (under uSwitch), had helped over 30,000 customers switch energy supplier, the claims in the ad were accurate and therefore concluded that the ad was not misleading."
However, it is not the case that goodwill attaching to goods and services provided by a trade mark licensee will automatically accrue to the trade mark owner. Where a registered trade mark becomes separated from its goodwill, there is a risk of it being revoked. It is therefore always good practice to include express provision for the goodwill to stay with the licensor in any trade mark licence.

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