Decision

Decision on Cavern Records Limited

Published 18 May 2020

Companies Act 2006

In the matter of application no. 1912 for a change of company name registration no. 11534704

Backround and pleadings

1. The company name CAVERN RECORDS LIMITED (“the primary respondent”) has been registered since 24 August 2018 under number 11534704. The matter comes before us by way of an application filed on 11 January 2019 by Cavern City Tours Limited (“the applicant”) under section 69 of the Companies Act 2006 (“the Act”), which is as follows:

“69. (1) A person (“the applicant”) may object to a company’s registered name on the ground―

(a) that it is the same as a name associated with the applicant in which he has goodwill, or

(b) that it is sufficiently similar to such a name that its use in the United Kingdom would be likely to mislead by suggesting a connection between the company and the applicant.

(2) The objection must be made by application to a company names adjudicator (see section 70).

(3) The company concerned shall be the primary respondent to the application.

Any of its members or directors may be joined as respondents.

(4) If the ground specified in subsection (1)(a) or (b) is established, it is for the respondents to show―

(a) that the name was registered before the commencement of the activities on which the applicant relies to show goodwill; or

(b) that the company―

(i) is operating under the name, or

(ii) is proposing to do so and has incurred substantial start-up costs in preparation, or

(iii) was formerly operating under the name and is now dormant; or

(c) that the name was registered in the ordinary course of a company formation business and the company is available for sale to the applicant on the standard terms of that business; or

(d) that the name was adopted in good faith; or

(e) that the interests of the applicant are not adversely affected to any significant extent.

If none of these is shown, the objection shall be upheld.

(5) If the facts mentioned in subsection 4(a), (b) or (c) are established, the objection shall nevertheless be upheld if the applicant shows that the main purpose of the respondents (or any of them) in registering the name was to obtain money (or other consideration) from the applicant or prevent him from registering the name.

(6) If the objection is not upheld under subsection (4) or (5), it shall be dismissed.

(7) In this section “goodwill” includes reputation of any description”.

2. Mr Alan Frank Challoner, who is a director of the primary respondent, has been joined to the proceedings as a co-respondent in accordance with s. 69(3) of the Act.

3. The applicant claims that use of “CAVERN”/ “THE CAVERN”/ “THE CAVERN CLUB”/ “CAVERN CLUB” began in 1957 in Mathew Street, Liverpool by the applicant or its predecessor in title. The applicant claims that THE CAVERN CLUB is considered the cradle of British pop music as it was the birthplace of the Beatles and has in subsequent years welcomed acts such as Stevie Wonder, Queen and Adele. The applicant claims that it has goodwill in relation to the following goods and services:

Wholesaling and retailing of CDs, DVDs; pre-recorded music, pre-recorded CDs, pre-recorded DVDs, pre-recorded films; records (sound recordings); organisation and delivery of live musical performances and concerts, live music services, live music shows, arrangement of musical performances, entertainment and shows; provision of musical entertainment; nightclub and bar services; cabaret services; entertainment services.

4. The applicant also claims that use of “CAVERN RECORDS” began in 1994 in Mathew Street, Liverpool, by the applicant or its predecessor in title in relation to the following goods and services:

Gramophone records; DVDs, CD-ROMSs DVD-ROMs, digital media; compact discs; sound and/or video cassettes; magnetic tapes bearing sound recordings; cassettes for the storage of, or containing, tapes for bearing sound recordings; cassettes for the storage of, or containing, tapes for bearing sound or video recordings; magnetic tapes, discs, and magnetic wires, all for sound or video recording; sound and/or video recording on corresponding recording carriers; apparatus, instruments and media for recording, reproducing, carrying, storing, processing, manipulating, transmitting, broadcasting, retrieving and reproducing music, sounds, images, text, and information; photographic and cinematographic apparatus and instruments; television and radio apparatus; sound or video reproduction apparatus; reproductions of sound and/or video in electronic and digital form; record production and music publishing; distribution of audio/visual products, music and sound recordings.

5. The applicant owns UK and EU trade marks, both word and figurative, which are or include “CAVERN RECORDS”/ “CAVERN CLUB”/ “THE CAVERN”. These trade marks have application dates between 2008 and 2015 and are registered for various goods and services in, inter alia, classes 9 and 41.

6. The applicant claims that a store named CAVERN RECORDS LIMITED is likely to lead third parties to believe that the respondent’s business is that of the applicant, or that it is connected to it. This will result in damage to the applicant.

7. The applicant asks that the name be removed from the Companies Register and that the co-respondent be ordered not to take steps which result in another name which is offending being registered.

8. The primary respondent filed a notice of defence denying the applicant’s grounds. We note, in particular, that the primary respondent:

• Claims that it has been operating record shops since 1977, trading as “Cavern Records” and that it has been prominent in the music industry, featuring in television programmes, books and films and appearing at trade shows internationally;
• Claims that it believes that it traded first under the name Cavern Records;
• Denies that it acted in bad faith and claims that, to show good faith, it has not traded as Cavern Records since registering the name.

9. Two documents are attached to the defence. The first is a photograph from Google Earth of a shop front which bears the name “CAVERN RECORDS” and a London telephone number, which is dated November 2008. The second is a print from www.yelp.co.uk showing a review for Cavern Records (at a London address) dated 15 November 2008.

10. The primary respondent indicates that it also relies on the defences under ss. 69(4)(a), (b), (c) and (d) of the Act.

11. The applicant is represented by Forresters IP LLP. The respondents are unrepresented litigants. Only the applicant filed evidence. The parties were asked if they wanted a decision to be made following a hearing or from the papers. Neither side chose to be heard. The applicant filed written submissions in lieu of a hearing, which we will bear in mind.

12. Both parties seek an award of costs.

Evidence

13. We will only summarise the evidence to the extent we consider necessary.

14. Only the applicant filed evidence. This consists of a witness statement and 31 exhibits from George William Guinness, a director of the applicant.

15. Mr Guinness gives a history of “The Cavern Club”, which opened on 16 January 1957 at 10 Mathew St, Liverpool. It was originally a jazz venue but expanded its acts and, on 9 February 1961, the Beatles became the house band of the club, where they performed for the following three years. The club appears to have closed in 1973, after which it was demolished. Mr Guinness says that “The Cavern Club of today” was rebuilt on the same site using bricks from the original cellar and is “an exact replica” occupying 75% of the original space.

16. An exhibited Wikipedia article, last edited on 27 July 2018, indicates that the Cavern Club closed in May 1973 and reopened in 1984, only to close in 1989 before it was finally opened again in 1991^{[footnote 1]}; The article states that acts such as Adele, Jessie J and Oasis have used the venue as a tour warm-up venue; the Arctic Monkeys are said to have done so in October 2005 and Jake Bugg in November 2013. It notes that the front room of the venue is the “main tourist attraction”.

17. The venue appears to have a “wall of fame”. Articles dated 2012 and 2014 from the website www.cavernclub.org reference new additions; there is also an article from www.liverpoolecho.co.uk which refers to a member of the Monkees playing at the club and getting his own brick in the wall^{[footnote 2]};

18. Mr Guinness refers to two performances by Paul McCartney at the Cavern Club. The first was on 14 December 1994. It is said that over 1 million people applied for the 300 available tickets and that the concert headlined every British daily newspaper the following day. The recording was later released on DVD under the title “Paul McCartney: Live at the Cavern Club!”. Wikipedia articles are provided which reference this performance and the DVD release.^{[footnote 3]}; Paul McCartney is said to have performed again at the venue on 26 July 2018. A BBC news article is provided which is said to concern this concert^{[footnote 4]}; Much of it is illegible but is entitled “Sir Paul McCartney rolls back the years in Cavern comeback (but no phones please)” and there is a visible reference to “the Cavern Club” and 250 attendees.

19. An article dated 6 January 2011 from the Liverpool Echo is provided, which reports a performance of Adele at “Liverpool’s famous Cavern Club”, ahead of the release of her best-selling “21” album^{[footnote 5]};

20. Contracts between the applicant and various artists are provided for performances on 17 March 2016, 24 February 2017, 20 April 2017 and 30 November 2017, all at the Cavern Club^{[footnote 6]}; Also included are an invoice and a press release for performances at the Cavern Club on 21 and 27 June 2017, as well as information about some of the artists^{[footnote 7]};

21. There is exhibited an agreement between the applicant and the Bootleg Beatles for a performance at the Philharmonic Hall, Liverpool on 28 August 2017, along with website prints advertising the performance (“The Cavern 60th Anniversary Concert”)^{[footnote 8]}; Mr Guinness says that the concert was to celebrate the history of the Cavern Club.

22. Prints of the Tripadvisor website are provided^{[footnote 9]}; Archive prints, taken from the WayBack Machine and dated 2 July 2016 and 5 October 2017, show “The Cavern Club” among the “Top 10 Landmarks—United Kingdom”. Prints, said to be from 2018, show the Cavern Club at number 8, ahead of Buckingham Palace. An article from the Liverpool Echo dated 22 May 2018 reports the 2018 Tripadvisor rating, describing the Cavern Club as “One of Liverpool’s most famous places” and a “world-famous live music venue”^{[footnote 10]};

23. Various articles are provided in which the Cavern Club is mentioned, including reports from the BBC, dated between 29 October 2013 and 10 February 2017, and an article from www.clickliverpool.com dated September 2011^{[footnote 11]}; There is also evidence of books in which the Cavern Club has featured^{[footnote 12]}; These include 100 Places that made Britain (BBC Books: 2011), Liverpool’s Musical Landscapes (Virgin Books: 2018) and The Best of the Cellars: The Story of the Cavern Club (Tempus: 2007)

24. Archive prints taken from the WayBack Machine, which appear to be of the Cavern Club’s website and are dated between 2013 and 2018 are in evidence^{[footnote 13]}; “cavern”, “CAVERN CLUB” and “THE CAVERN CLUB” are visible. It is said that these prints relate to nightclub and cabaret services but the detailed information on the prints is not legible.

25. “Cavern Records” is said to be a production label, including music production. Evidence is provided of various records published under the label between 1998 and 2015, most of which Mr Guinness says are still available.^{[footnote 14]}: Royalties information between 2012 and 2018 is provided but is illegible; it is said to include outlets such as Spotify, iTunes and Google Play^{[footnote 15]} It appears that most of the iTunes traffic for Cavern Records is generated in the UK, though this was only 297 tracks/units between January 2012 and January 2018^{[footnote 16]}; More information is provided of iTunes downloads between February 2014 and December 2017 for the Cavern Records label^{[footnote 17]}; Some purchases are clearly in the UK.

26. As the respondents filed no evidence, that concludes our summary of the evidence insofar as we consider it necessary.

Goodwill

27. If the primary respondent defends the application, as here, the applicant must establish that it has goodwill or a reputation in relation to a name that is the same, or sufficiently similar, to that of the company name suggesting a connection between the company and the applicant. If this burden is fulfilled, it is then necessary to consider if the primary respondent can rely upon defences under s. 69(4) of the Act.

28. Section 69(7) of the Act defines goodwill as a “reputation of any description”. Consequently, in the terms of the Act it is not limited to Lord Macnaghten’s classic definition in IRC v Muller & Co’s Margerine Ltd [1901] AC 217:

“What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start.”

29. The relevant date is the date of incorporation of the primary respondent which, in this case, is 24 August 2018. The applicant must show that it had a goodwill or reputation at this date associated with the names “CAVERN”/ “THE CAVERN”/ “THE CAVERN CLUB”/ “CAVERN CLUB” or “CAVERN RECORDS”.

30. It is clear from the evidence that the Cavern Club is a venue of historical musical significance, due to its connection with the Beatles. Whilst the venue faced financial difficulties and closures in the 1970s and 1980s, it appears to have been operating uninterrupted since 1991.

31. The evidence shows that the Cavern Club is not only known locally in Liverpool but that between 2016 and May 2018 it was considered a tourist attraction of national significance on Tripadvisor. Although much of its reputation appears to be based on its historical association with the Beatles, there is also evidence that the venue has attracted popular artists, including, for example, Paul McCartney for a concert to mark the turn of the century, and that at least until November 2017 it was continuing to provide live music performances. Given the size of its reputation and the relatively short period between the last performances in evidence, coupled with the 2018 Tripadvisor ranking, we are satisfied that the applicant had, at the relevant date, goodwill in the UK in relation to live music services. The name “The Cavern Club” is distinctive of that goodwill.

Similarity of names

32. The other initial burden facing the applicant is whether the company name is sufficiently similar to its own name to suggest a connection between the company and the applicant. The company’s name is Cavern Records Limited. The differences between the names are the words “Records” and “Limited” in the respondent’s name and, in the applicant’s name, “The” and “Club”. “Limited” merely indicates the corporate status of the company and is not a significant difference. “Club” indicates a venue or association, whilst “The” serves to signal that a particular club is indicated by the applicant’s name. The names coincide in the word “Cavern”, which is the most distinctive element of the names, and they are highly similar overall.

33. It is appropriate to take into account the nature of the goodwill relied on by the applicant. The use in s. 69(1) of the words “a name associated with the applicant in which he has goodwill” indicates that the applicant’s goodwill is to be considered in the assessment of whether use of the contested name is likely to mislead. By contrast, the nature of the primary respondent’s business is not usually an important factor in the assessment of whether use of the contested name is likely to mislead. This is because (a) although a company’s main business activities are recorded in the register of companies, this does not prevent companies from conducting other activities, and (b) the primary respondent’s current business plans do not constrain its future commercial activities. However, in this case the nature of the primary respondent’s business is clearly indicated in the name “Cavern Records Limited”, which is not a name that lends itself to use in relation to commercial activities unconnected with records.

34. In our view, there is strong prima facie case that those familiar with the applicant’s goodwill under “The Cavern Club” are likely to be misled into believing that “Cavern Records Limited” is an extension of the activities provided by the applicant under “The Cavern Club”. This is because the names are very similar and because the provision of retail services connected with records, or indeed other services connected with records, such as record production, are a plausible extension of the live music services in which the applicant has goodwill. Further, such a perceived extension would naturally account for the presence of “Records” rather than “Club” in the contested name. Consequently, we find that the applicant’s case satisfies s. 69(1)(b) of the Act.

Defences

35. As the ground specified in subsection 69(1)(b) is established, the onus switches to the primary respondent to establish whether it can rely on any of the defences pleaded. These will be considered in turn.

Section 69(4)(a): that the name was registered before the commencement of the activities on which the applicant relies to show goodwill.

36. The name was registered on 24 August 2018. The applicant has established that it was operating a business at that date and that the business had been in existence since at least 1991. This defence cannot succeed and is dismissed accordingly.

Sections 69(4)(b)(i) and (ii): that (i) the company is operating under the name or (ii) is proposing to do so and has incurred substantial start-up costs in preparation.

37. The relevant date for the assessment is the date of the applicant’s complaint to the tribunal, i.e. 11 January 2019. The operating defence does not, in our view, represent a high hurdle. It simply requires that the respondent has, before the relevant date, engaged in some form of external commercial activity which shows that the company is operating under the name.

38. Although the primary respondent did not file formal evidence, the notice of defence was signed by Mr Challoner and included a statement of truth. It is appropriate, in our view, that the documents attached to the defence should be considered and we have done so. Mr Challoner states that the primary respondent has been operating record shops under the name “Cavern Records” since 1977. However, the photograph attached to the defence, which shows a shop front bearing the sign “CAVERN RECORDS” gives the “imagery date” as November 2008. The attached review is also dated November 2008, although the map data appears to have been retrieved in 2019. Despite the assertions made by Mr Challoner in the defence as to the activities of the primary respondent, no evidence was filed to support these contentions. Our view is that the evidence before us is insufficient to establish that the primary respondent was trading as at 11 January 2019. The primary respondent admits that it has not traded under the name since incorporation. There is also no evidence of any start-up costs incurred in preparation for operations. This defence is not made out.

Section 69(4)(b)(iii): that the company was formerly operating under the name and is now dormant.

39. As the primary respondent’s status is recorded as “Active” on the Companies House database, this defence is not available and is dismissed accordingly.

Section 69(4)(c): that the name was registered in the ordinary course of a company formation business and the company is available for sale to the applicant on the standard terms of that business

40. There is no evidence in support of such a defence. It fails.

Section 69(4)(d): that the name was adopted in good faith

41. The onus is on the respondents to show that the contested name was adopted in good faith. This is evident from the wording of s. 69(4) of the Act, which reverses the usual persuasive and evidential burdens in civil law cases where good faith will normally be presumed and bad faith must be proven by the person alleging it. The reverse burden is justified by (a) the purpose of the legislation – which is to prevent the opportunistic registration of company names (also known as ‘company name squatting’), and (b) the practical difficulty that applicants would face if they had the burden of showing that a (usually unused) company name was adopted for opportunistic reasons. It should be easy for a respondent to explain its purpose in registering a name and to provide business plans etc. By contrast, it would usually be very difficult for an applicant to establish what the respondent’s motives were in registering the name. The legislature has addressed this difficulty by providing sufficient defences so that anyone acting in good faith can avoid the consequences of adopting a name which is the same as, or similar to, one in which someone else has associated goodwill.

42. Mr Challoner explains that “We are not trying to infringe any copyright but believe we traded the name Cavern Records first. We registered the name Cavern records Ltd in good faith […] To show good faith we have not traded as Cavern Records since registering the name”. He makes various assertions in the defence regarding the primary respondent’s trading activities and reputation. However, none of these contentions is supported with documentary evidence or with a fuller explanation in narrative evidence. As we have already indicated, it would have been easy for the respondents to provide evidence of trading or business plans to account for the registration of the name. Our view is that the statements in the defence, even though submitted with a statement of truth, are insufficient to discharge the burden on the respondents of proving good faith. This defence also fails.

Outcome

43. As we have dismissed all of the defences, the application succeeds.

44. In accordance with section 73(1) of the Act, we make the following order:

(a) CAVERN RECORDS LIMITED shall change its name within two months of the date of this order to one that is not an offending name^{[footnote 18]};

(b) CAVERN RECORDS LIMITED and Alan Challoner each shall:

(i) take such steps as are within their power to make, or facilitate the making, of that change;

(ii) not cause or permit any steps to be taken calculated to result in another company being registered with a name that is an offending name.

45. In accordance with Section 73(3) of the Act, this order may be enforced in the same way as an order of the High Court or, in Scotland, the Court of Session.

46. In any event, if no such change is made within two months of the date of this order, we will determine a new company name as per section 73(4) of the Act and will give notice of that change under section 73(5) of the Act.

47. All respondents, including Mr Challoner, have a legal duty under Section 73(1)(b)(ii) of the Act not to cause or permit any steps to be taken calculated to result in another company being registered with an offending name; this includes the current company. Non-compliance may result in an action being brought for contempt of court and may result in a custodial sentence.

Costs

48. As the applicant has been successful, it is entitled to a contribution towards its costs, based upon the scale of costs published in paragraph 10.1 of the Practice Direction. We award the applicant costs on the following basis:

Fee for application: £400

Preparing a statement and considering the primary respondent’s statement: £400

Preparing evidence: £500

Fee for filing evidence: £150

Written submissions: £250

Total: £1700

49. We order CAVERN RECORDS LIMITED and Alan Challoner, being jointly and severally liable, to pay Cavern City Tours Limited the sum of £1700 within 21 days of the expiry of the appeal period, or within 21 days of the final determination of this case if any appeal against this decision is unsuccessful. Under section 74(1) of the Act, an appeal can only be made in relation to the decision to uphold the application; there is no right of appeal in relation to costs.

50. Any notice of appeal against this decision to order a change of name must be given within three months of the date of this order. Appeal is to the High Court in England, Wales and Northern Ireland and to the Court of Session in Scotland.

51. The company adjudicator must be advised if an appeal is lodged, so that implementation of the order is suspended.

Dated 28 April 2020

Heather Harrison
Company Names Adjudicator

Christopher Bowen
Company Names Adjudicator

Judi Pike
Company Names Adjudicator

1. Exhibit GWG1, pp. 1-6 ↩

2. GWG1, pp. 7-13. ↩

3. GWG1 and GWG2. ↩

4. GWG3 ↩

5. GWG4 and GWG5 (the latter a Wikipedia article about the album). ↩

6. GWG12, GWG13. ↩

7. GWG13, GWG14. ↩

8. GWG15. ↩

9. GWG6. ↩

10. GWG7. ↩

11. GWG8, 14GWG10. ↩

12. GWG9. ↩

13. 2GWG11. ↩

14. GWG22. ↩

15. GWG23. ↩

16. GWG26. ↩

17. GWG27. ↩

18. An “offending name” means a name that, by reason of its similarity to the name associated with the applicant in which he claims goodwill, would be likely to be the subject of a direction under section 67 (power of Secretary of State to direct change of name), or to give rise to a further application under section 69. ↩