Alfred is expected to be hit by a hefty compensation payout, a seven-figure legal bill, and the cost of writing off the estimated £400,000 it paid to rebrand itself "McAlpine".
The judge's decision means that it will have to wipe out its purple logo from company's headed notepaper and from site notice boards. Early estimates are of £2m for the cost of rebranding and the legal fees. Then there is the public ignimony for the management who went ahead with the rebranding, and decided to fight the inevitable court case.
This struggle was between two of the biggest players in the construction industry. But what has made it intriguing is that it has also centred on a family dynasty that stretches back over half a century.
The story begins in 1869, when a Glaswegian called Robert McAlpine, aka "Concrete Bob" set up a building business. This prospered, and by the 1930s one of his sons, Alfred, wanted to set up his own business. He came to an agreement with his brothers Malcolm and William, who ran Sir Robert McAlpine. This was that the two companies would work in different parts of the country – Alfred in the North-west, North Wales and the West Midlands, and Sir Robert in the south of England. Eventually both companies grew to be national businesses, after which they operated on an unwritten agreement to use their first names as distinguishers at all times.
However, the McAlpine family sold its remaining shares in Alfred McAlpine, which is now a publicly owned company, eight years ago, and the informal agreements made over port and cigars was allowed to lapse.
They are not entitled to represent themselves as if they were the only company known by that name when they are not
Mr Justice Mann, High Court
Alfred McAlpine embarked on a rebranding exercise, which was veiled in secrecy to prevent Sir Robert blocking it. In his judgment, Mr Justice Mann said: "It is clear from the evidence that the decision not to give Robert any prior warning was a deliberate one, born out of the fear that if Robert knew in advance then it might take steps to stop it."
Ian Grice, the chief executive of Alfred McAlpine, said in the High Court that he expected outrage from the McAlpine family, but not legal action. "We were surprised at how upset they were. We were expecting some reaction, but not this," he said.
If Alfred McAlpine thought that by rebranding itself as a more modern, high-tech firm it could intimidate the publicity-shy Sir Robert and avoid going to court, it was wrong. Sir Robert McAlpine found out about the rebranding from an Alfred McAlpine press release and quickly issued a writ. The company wanted a quick resolution.
At the first legal hearing a month after the rebranding in October last year, Sir Robert McAlpine sought either an interim injunction or a speedy trial. The courts agreed to the latter and a trial date was fixed for the High Court on 2-10 March.
Mr Justice Mann considered evidence from 26 witnesses, and took three weeks to consider his judgment before finding in Sir Robert McAlpine's favour. "We wouldn't have gone forward if we didn't think we had the law on our side," said a spokesperson for Sir Robert McAlpine. "We're delighted. Now we want to move on. Alfred McAlpine needs to find another way forward."
The McAlpine family issued a written statement that said: "We are naturally very pleased. We are satisfied that 135 years after Robert McAlpine started his company that both Sir Robert McAlpine and Alfred McAlpine plc maintain the reputation that the McAlpine name enjoys."
But the court case revealed that it was Sir Robert McAlpine's City reputation that formed part of the reason for Alfred's rebranding. Notes and reports made by Fishburn Hedges, the communications agency that worked with Alfred McAlpine during the rebranding exercise, were used as evidence in the case. Under the heading "The Customer Perspective" and "Positives" was listed the point: "Sir Robert gives illusion of greater size — punching above weight."
Having heard this evidence, Mr Justice Mann said: "It seems to me that "McAlpine" is capable of being a reference to Robert. If used by Alfred in relation to its business, then that would be capable of being a misrepresentation."
He concluded that "passing off" had been established. He said: "The effect of passing off extends into effects that are more subtle than merely sales lost to a passing off competitor."
Subject to minor amendments, Mr Justice Mann granted the injunction that prevents Alfred McAlpine carrying out business without using either its first name or some other distinguisher.
Both sides will reconvene at the High Court this week, where Sir Robert McAlpine will hope to hammer out the details of the injunction and put the matter to rest.
Under the heading ‘The Customer Perspective’ and ‘Positives’ was listed the point: ‘Sir Robert gives illusion of greater size — punching above weight’
The note from Alfred McAlpine’s PR agency that tipped the case
Alfred McAlpine will ask for leave to appeal; if it is granted, the costs of the case will continue to spiral – landing the losing party with an additional six-figure sum.
Brand consultant James Withey, from Landor, says Alfred McAlpine may be better to quit before it gets any further behind, and salvage what it can from the rebranding exercise.
"If they rebrand for a second time, all the original investment is not lost," he says. "Some of the upfront work to research where the company is at the moment is not necessarily lost. Because the rebranding is recent, and the case was resolved relatively quickly, subject to appeal, they could return to being Alfred McAlpine without significant damage."
Perhaps a better option would be to have a total change, to cut ties with the McAlpine dynasty altogether. Withey suggests that to get away from the family name completely may be the best move, and he questions the validity of the original rebranding. "If there was a real problem with the Alfred McAlpine name stretching across all the things that they do, then just removing the 'Alfred' might not be enough."
The two companies have previously been involved in joint ventures, most notably on the Eden Project in Cornwall. Sir Robert McAlpine's spokesperson was hopeful that this case would not mean such ventures could not happen again.
"From our point of view we will look for opportunities to work together," she said. But if the case does go to the Court of Appeal, it seems unlikely that the two will be in the frame of mind to discuss friendly mutual relations. Not that Alfred McAlpine won't be kept busy — they could be going through the 42,000 different logos that they kept on file when carrying out their rebranding to see if there is another that will keep them out of the courtroom.
Comment: The brand is not the name
In penning Julius Caesar, Shakespeare can be forgiven for not fully anticipating the almost deviant obsession that would develop 400 years after his birth for protecting and managing the names that act as vessels for that extraordinary 20th-century phenomenon – the brand.
As readers of Building will be aware, Alfred McAlpine, which no longer has any familial links to the original company, last year “rebranded” by abandoning its first name and introducing a new logo. Undoubtedly, it did this for what it considered to be sound commercial reasons, and almost certainly with the benefit of expensive advice from design consultants. Now the High Court has decided that this amounts to “passing off” and, unless it makes a successful trip to the Court of Appeal, Alfred will probably be forced to abandon the whole exercise.
Does all this matter? Well, I am afraid it does. Although the respective firms each has a different business model and a strong reputation, the similarity in names does cause confusion in the marketplace. And the names do not have the same value.
“Sir Robert McAlpine” is more than 10 times better known than “Alfred McAlpine”, and recognition of the stripped-down “McAlpine” name is stratospherically higher than both.
On the assumption that a merger of the two McAlpines is too drastic a solution to the branding problem, Alfred McAlpine has two options.
The first is a return to the status quo ante. As was pointed out in The Times last week, Alfred’s position is not unique. The Byzantine structure of the Rothschild family confounded the banking world until the disparate stands were drawn together last year in a move to simplify its corporate structures.
Had the separation of NM Rothschild from the Rothschild name harmed or damaged the brand equity within both operations? Absolutely not. All elements of the group had always elegantly managed the reputation of their business and thrived and prospered as a result – although it is worth mentioning that, following the nationalisation of the Rothschild Bank by President Mitterrand in 1981, David de Rothschild fought tooth and nail to claim the name back from the French government.
According to this scenario, both firms get on with exploiting the excellent reputation they independently possess. They should build businesses that enjoy the recognition and financial returns that owe more to business acumen than a name.
The second option is to change the name to something completely different, as Carillion did. The argument for this is that, at a time when damaged reputations or confused identity can damage a company’s ability to win and dominate markets, clarity of brand values is preferable to the nebulous advantages that may arise from an ancient Scottish name.
Although a matter of constant irritation to me, the clear and incisive thinking on this question emanates from the USA; as Judge Learned Hand commented on permitting one Samuel Goldfish to change his name to Samuel Goldwyn, “A self-made man or company may prefer a self-made name.”