The dangers of using false accreditations
The recent case of National Guild of Removers and Storers Ltd v Bee Moved Ltd demonstrates the dangers of falsely claiming accreditation with an association. In this case a passing off claim was upheld by the court and the Defendant's directors were found personally liable, as well as the company.
An action was taken against a removal and storage company, Bee Moved Ltd ('Bee Moved') and its two directors, who were held to be the "controlling mind" of Bee Moved (and also the only two shareholders, each holding 50% of Bee Moved's shares). The action was brought by the National Guild of Removers and Storers Ltd ('the National Guild'), who represented a number of members of the removals and storage industry.
The National Guild alleged that Bee Moved use of the terms "The National Guild of Removers and Storers", "the Guild" and "NGRS" ('the Names'), on web advertisements amounted to passing off as it suggested they were accredited by these organisations. Bee Moved advertised the Names on its own webpage and also a third party website.
The National Guild made the following arguments:
- On Bee Moved's own website there appeared a bullet point "use a removal company who is a member of the National Guild of Removers and Storers". Bee Moved admitted that the National Guild had substantial goodwill and when members of the public saw the Names used, in connection with removals and storage services, they would believe that the person supplying those services was associated to the National Guild.
- Bee Moved also advertised on Really Moving website, an independent third party, stating that it was a "member of NGRS", which they were not. Bee Moved argued that this was a mistake as the website had crashed and replicated itself and this had been taken from a previous edition of the website.
Perhaps predictably the Court sided with the National Guild. The Court held:
1) It was open to the National Guild to bring an action for passing off.
2) Bee Moved's advertisement (on its own website) implied that it was a member of the National Guild and it was therefore implied that this was damaging to the National Guild's business and goodwill.
3) In respect of the Really Moving advertisement, Bee Moved was not liable for actions taken by independent third parties where it had no knowledge of such acts nor where they had not intended the statement to appear.
The Court held all 3 defendants (Bee Moved and its two directors) were liable for passing off.
The National Guild has been active in recent years to enforce its goodwill and bring passing off claims against parties – this case follows a claim in November 2014 where they brought an action against a party for saying they were accredited when the party's accreditation had terminated.
- Do not use membership accreditations on advertisements or websites when you or the company are not accredited or they have expired;
- Keep the content of your company's website up to date; and
- Be aware that individual directors can also be held personally liable for passing off claims against the company.
If you have any questions about accreditations please contact Jill Bainbridge.