When charity ends up in court

A ROW between two charities has given rise to a landmark ruling in the High Court Chancery Division.

The battle centres on a dispute over names between two organisations who raise cash to help the fight against diabetes.

The 60-year-old, 150,000- member British Diabetic Association which has 450 groups nationwide challenged another charitable organisation calling itself the Diabetic Society.

Now, after a unique passing- off action Mr Justice Robert Walker has ruled that the Diabetic Society must stop using the name because it could lead to confusion between the two in the eyes of the public, including those who wish to donate money or leave legacies.

The case, the first of its kind between charities, has for the first time established that charities can tackle each other in this way. Previously cases have been confined to charities suing commercial organisations over the use of names.

Passing-off clashes usually involve commercial organisations seeking to prevent others capitalising on their reputations by producing goods which will be mistaken for theirs.

However, the charity aspect of this case alone marks "a significant step forward" says Paul Stevens of Nabarro Nathanson's intellectual property department. Stevens was instructed on behalf of the association from the outset of the proceedings.

"The rights of charities to act in this way has never been decided before," he says. "In this area alone the case has brought major clarification." The case for the association was not a straightforward one.

Although its full title is the British Diabetic Association it is also known unofficially as the Diabetic Association, and answers to the 'nicknames' the British Diabetic Society and the Diabetic Society.

In a decision which proves the difficulty of protecting such nicknames the judge rejected the association's claims that they had a right to protect their monikers, by holding that they had failed to prove that they had sufficient reputation in those nicknames.

However, he went on to hold that despite this the name chosen by the society was sufficiently similar to that of the association to cause confusion and that use of it should therefore be banned.

Another aspect of this case which Stevens says distinguished it from other passing-off actions is that it ran the full course. In many such cases the defendants back down at the interlocutory stage. Although this did not happen in this instance the judge in his ruling gave the strongest indication possible he felt it should have done.

He told the parties he considered it "a pity to say the least" that the Diabetic Society had not changed its name. By doing so it would have avoided costly litigation.

Stevens says that the implications of the case for charities are enormous.

Charities are facing increasing competition for funds, exacerbated by the advent of the National Lottery. In these circumstances he says the goodwill and reputations of charities have taken on new importance.

Counsel during interlocutories and in the final trial were David Young QC, Denise McFarland and Simon Thorley QC.