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Liability of an employer for passing off by an employee

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13/05/2015

In a summary judgment decision last June, HHJ Hacon in the Intellectual Property Enterprise Court (IPEC) found that the registration by an employee of the defendant of domain names incorporating the terms “X-Pole” and “Silkii”, used by the claimant in relation to its pole dancing products, constituted passing off. The IPEC also found that the domain names were used as instruments of deception, the employee having attempted to sell the domain names to the claimant.

In Vertical Leisure Ltd v Poleplus Ltd [1] the issue for the IPEC was whether the defendant, Poleplus, was vicariously liable for the acts of that employee, even though the registrations had been made in the name of the employee.

The IPEC found that Poleplus was both vicariously liable and jointly liable. It was vicariously liable because the primary purpose in the employee’s mind was to protect the interests of his employer and the registrations were within the types of act that he was employed to do – indeed, he had sole responsibility within the company for registering domain names. It did not matter that the registrations were in the employee’s rather than the company’s name.

The IPEC did not find Poleplus liable by reason of a common design. The Court considered the recent Supreme Court judgment on the common design in Sea Shepherd UK v Fish and Fish Ltd [2] which it summarised to mean that in order to fix an alleged joint tortfeasor (in this case the company) with liability, it must be shown both that it actively co-operated to bring about the act of the primary tortfeasor (the employee) and also that it intended that its co-operation would help to bring about that act (the act found to be tortious). Liability will always be subject to the threshold requirement that the alleged joint tortfeasor’s contribution to the act was more than de minimis.

In this case, there was no evidence to suggest that the sole director had caused or encouraged the employee to register the domain names; indeed, the evidence indicated that she had been unaware of the registrations until they had been made.

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[1] [2015] EWHC 841 (IPEC)
[2] [2015] UKSC 10

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