The feeling’s not mutual

12th Oct 2018

Heather Williams on why IPEC refused to extend the tort of passing off. [2018] EWHC 1575 (IPEC), The Military Mutual Ltd v Police Mutual Assurance Society Ltd & Ors, High Court, 22nd June 2018.

The feeling's not mutual

[2018] EWHC 1575 (IPEC), The Military Mutual Ltd v Police Mutual Assurance Society Ltd & Ors, High Court, 22nd June 2018

Key points

  • In principle, the law of passing off could protect goodwill associated with the name of a type of service or organisation
  • Clearly defining the goodwill relied on is key to succeeding in this type of claim

This case confirmed that, in principle, the law of passing off can protect goodwill associated with the name of a type of organisation. However, the Claimant was not successful in its bid to show that there was sufficient goodwill in the term “mutual” when “mutual” is defined as an organisation owned solely by all or some of its customers. 

Parties and background

The Claimant, The Military Mutual Ltd (MML), arranges the provision of insurance services to existing and past members of the armed forces and their families. The first Defendant, Police Mutual Assurance Society Ltd (PMAS), is the successor company to an association set up in 1866 to provide financial and welfare support to police officers, police staff and their families (the Police Force). During the trial it emerged that PMAS’s direct dealings are still with the Police Force only, and MML accepted that PMAS’s activities with the Police Force qualified it as a “mutual” within MML’s definition. 

The second to fourth Defendants are subsidiaries of PMAS (together Forces Mutual). In April 2016, the website forcesmutual.org was set up, offering insurance services and operated by the second and fourth Defendants. The financial services offered by Forces Mutual include insurance for military kit, life insurance, dental and health insurance, and other financial products, such as mortgages and savings products.

Claim basis 

The proceedings concerned the use of the word “mutual” in Forces Mutual’s trading name. Forces Mutual does not allow customers who are members of the armed forces to become members and part owners of Forces Mutual or PMAS. Accordingly, MML claimed that Forces Mutual was not a mutual entity within MML’s definition. MML’s case was that its status as a mutual gives it a cause of action for passing off against Forces Mutual. MML claimed it would have no objection if Forces Mutual’s trading practices were changed to bring them within MML’s definition of a mutual or if the word “mutual” was excluded from the trading name.

Other issues

HHJ Hacon provided that, in extended passing off cases, the claimant must establish goodwill in the collective business in a type of product, that the name is distinctive of that type of product among a significant proportion of the public, and that the ownership of the goodwill is shared among the relevant traders of that class of products. 

MML argued that “mutual” unambiguously meant a stated type of organisation. However, MML failed to consistently define the term in either the pleadings or in the course of the trial. MML claimed that, by April 2016, the public recognised the term “mutual”, when used in the context of financial organisations, as designating a specific category of financial organisation, being one solely owned by at least some of its customers. By April 2016, MML had been trading for one year and claimed it shared the collective goodwill owned by financial organisations associated as a mutual. 

MML accepted that PMAS operated as a mutual, but argued its subsidiaries trading as Forces Mutual did not. As Forces Mutual did not offer products that confer on the purchaser membership and part ownership of PMAS or Forces Mutual, the use of the term “mutual” in its trading name amounted to a misrepresentation. 

MML argued that the false representation had resulted in a loss of business, and further that Forces Mutual’s use of “mutual” diluted and therefore damaged the collective goodwill associated with a financial mutual. 

The main issue

It was common ground that “mutual” has at least one broad meaning recognised by the relevant public. That meaning was interpreted to include some understanding that a mutual has no shareholders and is owned by stakeholders, who may be employees, customers or individuals of other kinds. However, it was noted that there are many examples of organisations described as mutual that are not owned solely or at all by customers, for example the John Lewis Partnership.

MML argued that, in the case of financial mutuals, there was a second, distinct and narrower meaning of “mutual”. This definition included the apparently well-known feature that the organisation is owned solely by some or all of its customers. 

Forces Mutual’s principal argument was that there was only one broad meaning of “mutual” and that if there existed any goodwill it was therefore shared by all mutuals operating within that broad meaning. Because Forces Mutual’s trading activities fell within the broad definition of a mutual, it was claimed there could be no misrepresentation when MML started to trade in April 2016, as, at that time, the Forces Mutual constituent companies were joint owners of the goodwill. 

Various dictionary definitions were submitted and multiple witnesses were called to weigh in on the definition of a “mutual” in the context of a financial organisation. The evidence did not support the claim that the relevant public believed financial mutuals are invariably owned by some or all of their customers. MML’s witnesses confirmed that many organisations acknowledged to be mutuals fell outside MML’s definition. It was concluded that the term “mutual” had only one known broad meaning. 

HHJ Hacon did not accept that any significant part of the public held the belief that, in the context of financial organisations, “mutual” meant that it must be owned solely by all or some of its customers. Accordingly, it was held that the shared goodwill asserted by MML did not exist and the claim was dismissed.

Open door

Though the Claimant was unsuccessful, HHJ Hacon has left open the door to others who may seek to rely on collective goodwill associated with a service or type of organisation. However, it is clear that, in order to succeed, it is necessary to succinctly define the class of service and demonstrate this singular meaning is associated by the relevant public with the services in question.

Heather Williams is a Chartered Trade Mark Attorney at Walker Morris LLP 

Matthew Lingard, a Solicitor at Walker Morris LLP, co-authored.