When passing off and trade mark rights clash: the WISE decision

What has happened?

• The High Court (IPEC) delivered its judgment last year in a dispute between Wise Payments Limited (formerly TransferWise) and With Wise Limited over the use of the "WISE" name.
• Each of the parties had partial success with no clear winner from the proceedings. The decision confirms that passing off and trade mark infringement claims are separate actions, with neither taking precedence over the other.
• It is therefore possible that one party can win on trade mark infringement while the other wins on passing off (as happened in the well-known Inter Lotto case). This can lead to a 'stale-mate'.
• To mitigate the risk, brand owners should conduct 'top up' clearance searches when there is a significant gap between the filing of a trade mark application and the commencement of use of the mark. This can help to 'flush out' whether a third party has acquired any passing off rights in the interim that might impact their use of the mark.
• The decision on passing off is useful, illustrating that actionable goodwill can be acquired quickly (here, in less than a year) and that damage can extend beyond trade diversion to include reputational harm where misrepresentations (such as incorrect statements) lead to customer confusion and/or erosion of trust.
• The court also applied the SkyKick ruling on bad faith. Importantly, the nature of the trade mark owner's business (money transfer) was sufficient to give rise to a prima facie case of bad faith for "computer software" and "application software" as these are very broad terms. Since the trade mark owner could not rebut that presumption, these terms were cut back.

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The order of events was as follows:

• August 2012 – the claimant (Wise Payments) changed its name to Transferwise and began trading under that name in the international money transfer and foreign exchange fields.
• October 2018 – the claimant (Wise Payments) applied to register the WISE logo and Transferwise (word) as trade marks in the UK for services in Class 9 (computer software etc) and 36 (financial affairs etc). The marks were registered in 2019.
• March 2020 – the defendant (With Wise) changed its name to With Wise and started trading under the With Wise and Wise names, providing onboarding software and payroll services to the logistics industry.
• February 2021 – the claimant (Wise Payments) announced its rebrand from "TransferWise" to "Wise" (by which time the defendant had been using the name WISE for about a year).
• June 2021 - both sides began receiving messages from each other's customers.

Wise Payments claimed trade mark infringement and passing off, whilst With Wise counterclaimed for passing off and that Wise Payment's registrations were partially invalid for bad faith (due to an overly broad specification and its earlier passing off rights).

Wise Payments (formerly Transferwise) – claimant – registered marks	With Wise – defendant – unregistered rights
TRANSFERWISE/ in Class 9 (computer software etc) and Class 36 (financial affairs etc) plus use for money transfer services	Used for providing onboarding software, payroll services and invoicing services etc to the logistics industry.

Bad faith

Applying the Skykick ruling, the court found certain terms in the claimant's, Wise Payments', specification overly broad and partially invalidated the registration for bad faith. The court said that:

• The breadth of the term "computer software" plus the nature of the claimant's business (money transfer) at the time of the filing is sufficient to establish an inference of bad faith. The onus is therefore on Wise Payments to rebut the presumption of bad faith in the usual way. Given that the claimant had failed to file any evidence as to the reason for the filing, the inference of bad faith had not been rebutted. If Sky was not able to justify a specification for computer software in the SkyKick case, neither was the claimant. Wise Payment's specification was limited to computer software and application software relating to financial, monetary, and related services (ie the software it might have had a reasonable expectation or intention of providing at the filing date).

• With hesitation, the judge also held that the same inference of bad faith could not be found for financial services in Class 36. While the specification was broad and imprecise, given the expansion and scope of the claimant's business before and after the filings, she could not infer that there were

  sub-categories of financial services for which Wise Payments never had any intention to use the mark.

Claimant's trade mark infringement

The court found medium-high similarity between the WISE logo mark and With Wise's signs, with likelihood of direct confusion for identical and similar services (payroll services, invoicing services, and related software). However, the infringement claim failed as regards the TRANSFERWISE mark due to the low similarity between the TRANSFERWISE mark and the WISE signs.

Claimant's passing off claim

Wise Payments' passing off claim failed because With Wise was the senior user of "WISE" (from March 2020), and Wise Payments had not established goodwill in "WISE" alone prior to its February 2021 rebrand.

Defendant's passing off claim

With Wise succeeded in its passing off counterclaim, having acquired goodwill in WISE for onboarding and payroll services (not covered by Wise Payments' registered trade marks) by February 2021. The court found that Wise Payments' use of "WISE" for payroll and invoice services would lead a substantial number of the public to believe in a trade connection with With Wise.

Damage was established through evidence that Wise Payments' operators were telling customers that With Wise's legitimate communications were scams, causing reputational harm and erosion of customer trust.

What does this mean for you?

• Broad terms like "computer software" can invite bad faith challenges, depending on the facts. Careful thought should be given to specifications.
• Conduct top up searches where there is a gap between filing a trade mark application and launch and remember that (rarely) trade mark infringement and passing off claims can coincide and lead to a stale mate.
• Remember that, although goodwill can build quickly, it won't transfer immediately when there is a rebrand.
• Train customer-facing staff appropriately. Telling customers that legitimate competitors are fraudulent can constitute actionable damage in passing off claims.
• Take sufficient care with evidence in proceedings – Wise Payments attempted to submit additional documents into the proceedings but was denied due to the strict timetable of IPEC and lack of "exceptional reasons" to justify its request.