Does a solicitor own the goodwill associated with their own name?
01 February 2017
In (1) Juthika Bhayani and (2) Bhayani Law Limited v Taylor Bracewell LLP this question was considered by the Intellectual Property Enterprise Court.
In a summary judgment application, the court maintained the usual rule that goodwill generated by an employee or partner vests in the employer or partnership and accordingly found that a partner’s claim against her former firm for passing off had no realistic prospects of success.
In 2011, Taylor Bracewell engaged Ms Bhayani, a specialist employment lawyer, as a salaried partner. Ms Bhayani provided services under the name ‘Bhayani Bracewell’ and in May 2014, a stylised version of this name was registered as a UK trade mark (“Trade Mark”).
In October 2014, Ms Bhayani left and set up her own firm, Bhayani Law Limited (“BLL”). Taylor Bracewell continued to offer employment services under the name ‘Bhayani Bracewell’.
In January 2016, the claimants commenced proceedings claiming that Taylor Bracewell had committed a number of acts of passing off including by way of the continued use of the ‘Bhayani Bracewell’ name, thereby falsely representing that Ms Bhayani was still working for the firm. The claimants also sought revocation of the Trade Mark arguing that its continued use would mislead the public.
Taylor Bracewell argued that it, and not Ms Bhayani, owned the goodwill generated by Ms Bhayani while she worked for the firm and Ms Bhayani could not therefore found a case in passing off. In response, Ms Bhayani argued that the goodwill she generated was at all times owned by her.
Taylor Bracewell also pointed to clauses of the relevant partnership agreement which permitted Taylor Bracewell’s continued use of the Trade Mark.
The court acknowledged that Ms Bhayani had a good reputation which existed “by itself” but held that goodwill is “indivisible from the business with which it is associated” maintaining the general rule that goodwill generated by an employee or partner will vest in the relevant business. While the court acknowledged there are exceptions to this general rule, for example where an employee or partner acquires goodwill as a result of activities which fall outside of their employment or partnership role, it did not consider these exceptions were applicable in the present case. The court therefore granted summary judgment in Taylor Bracewell’s favour in relation to the passing off claim.However, the court did not agree that the partnership agreement entitled Taylor Bracewell to continue to use the trade mark and held that this issue should be considered further at trial.
This case is a useful reminder that goodwill generated by employees or partners while undertaking activities associated with their status as an employee or partner will not be owned by the individual and will instead vest in the employer’s or partnership’s business. An individual will therefore need to negotiate a separate agreement if they wish to retain goodwill generated by them although this is likely to be very difficult in most situations.