When is a company liable for mis-describing its services online?

The answer is: when the company is responsible for the mis-description, according to the Court of Appeal in The National Guild of Removers & Storers Ltd v Bee Moved Ltd & Ors [2018] EWCA 1302 (Civ).

Introduction

The appellant (the National Guild of Removers & Storers Limited, ‘NGRS’) was a membership-based trade body in the removal and storage sector.

Bee Moved (‘BM’) was a removal company and a former NGRS member.

After BM’s membership expired, it had been mis-described as a ‘member of NGRS’ on a popular search directory for removal companies, ‘Really Moving’.

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The claim

The NGRS brought a claim against BM, alleging that its false statement on the Really Moving website was damaging to the NGRS’ reputation. BM’s defence was that it did not have control over the offending page in the search directory. After the expiry of its membership, BM had removed references to NGRS on the pages that it could control on the Really Moving website. Subsequently, the website had apparently crashed and automatically revived old, pre-edit webpages. BM’s old version of the advert had been on display, but BM had been unaware of this.

Once NGRS alerted BM to the offending words, BM asked Really Moving to remove the wording and they did so.

NGRS argued that the offending words originated from BM and therefore they were liable automatically for Really Moving’s use of that information, regardless of what BM knew and when.

At trial in the High Court, Recorder Campbell QC of the Intellectual Property and Enterprise Court (‘IPEC’), rejected NGRS’ claims.

He concluded that BM could not be liable for third party acts that it did not know of, authorise or intend. That had to be right because if Really Moving had refused to amend its website upon request, it would be wrong to hold BM liable. A similar conclusion had been reached in an earlier case brought by the NGRS running similar arguments (National Guild of Removers and Storers Ltd v Milner [2014] EWHC 670 (IPEC)).

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The appeal

On appeal to the Court of Appeal, NGRS argued that:

1. The Judge was wrong to conclude there was no automatic liability for passing-off in the circumstances; and
2. Late evidence showed that one of BM’s witnesses had lied about changes they had made to its website entries.

Ground 1: automatic liability for passing-off

Lady Justice Asplin in the Court of Appeal recalled the classic three-stage test for passing-off, established in Reckitt & Colman Products Ltd v Borden Inc & Ors [1990] RPC 341 at page 406. In summary, the test requires:

1. goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the distinctive brand;
2. a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the claimant;
3. People being misled by the misrepresentation caused damage, or is likely to cause damage, to the claimant.

NGRS argued that because no knowledge or intention was required in point 2 above, all that was required was that BM had provided the text to Really Moving in the first place. The Judge was therefore wrong to require knowledge or intention on the part of BM.

The Court of Appeal, in rejecting NGRS’ argument, found that the real issue was not knowledge or intent, but who was responsible for the misrepresentation. The guidance in Reckitt did not concern whether a misrepresentation had been made or not – it related to whether a defendant knew that there was a misrepresentation or intended there to be one.

NGRS had not argued that there was a relationship of agency, consent, authorisation or procurement. The tort could not be established because (at § 29): 

…if one has no knowledge of the existence of a representation published by a third party, whom one has neither authorised, nor is one’s agent, it cannot be said that one has “made” the representation oneself or impliedly consented to it being made by another.

No misrepresentation was made by BM nor was it responsible for the same. The website operator was responsible, (but no claim had been advanced against them). This ground of NGRS’ appeal failed.

Ground 2: fresh evidence

NGRS sought to rely on late fresh evidence (obtained after the trial) to show that one of the directors of BM had given evidence that was untrue and unreliable. The evidence was obtained via the Internet Archive. It apparently showed that BM could have accessed the directory pages on the Really Moving website and undermined the chronology of amendments as claimed by BM. However, NGRS had failed to explain the significance of this evidence, detail its provenance or present it in an accessible manner.

The Court of Appeal rejected NGRS’ application to admit fresh evidence. The state of the website had always been in dispute and there had been no major shift in the evidence to justify allowing the application. The evidence from the archive was also inconclusive because it did not cover the period immediately prior to when BM claimed to have made edits to the information that it could change on the Really Moving website (§§ 19 to 21).

This ground also failed.

Conclusions

This case offers a few take-home points (pun intended – sorry, it’s been a long post!):

• Holding a company responsible for misrepresentations online that appear on third-party independent websites requires some form of responsibility to be established, in the absence of which a claim for passing-off is likely to fail;
• When relying on the Internet Archive (its Way Back Machine function is a potentially useful resource for investigative research), make sure that you obtain the evidence in good time to be considered at trial and take care over how you present the information, what it means and the extent to which it is reliable. This probably requires expert evidence (for which permission of the Court may be needed).

As for the potential liability of the independent third party search engine, I’ve commented previously on this blog:

Public search engines are chasms of legal uncertainty. Despite more of our lives and data being processed through them, some simple questions remain unanswered.