TRADE MARKS AND PASSING OFF
Descriptive marks
BABY-DRY – Procter & Gamble -v- OHIM, Case C-383/99, September 2001
Procter & Gamble applied to register BABY-DRY as a Community Trade Mark for disposable nappies in 1996. The application was refused by OHIM on the grounds that it consisted of a sign which designated the intended purpose of the goods, (that is, was descriptive in nature) under Article 7(1)(c) of the Community Trade Mark Regulation. Procter & Gamble failed on appeal but persisted further to the full chamber of the ECJ. The ECJ decided that the mark was registrable on the grounds that BABY-DRY was not a familiar expression and represented a "lexical invention". Despite the fact that the mark obviously alluded to the goods in question it was not purely descriptive.
COMPANYLINE – DKV Deutsche Krankenversicherung AG -v- OHIM, Case C-104/00, September 2002
DKV applied for COMPANYLINE as a Community Trade Mark for insurance and financial affairs. The application was refused and on appeal this was confirmed by the Court of First Instance on the grounds that the mark was devoid of distinctive character under Article 7(1)(b) of the Community Trade Mark Regulation. DKV appealed to the ECJ. The Court dismissed the appeal finding the mark not registrable on the grounds that coupling the ordinary words "company" and "line" did not imbue them with any additional distinguishing characteristic. They were generic words, "company" suggesting goods or services intended for companies and "line" suggesting possibly a line of products or a branch of insurance.
DOUBLEMINT – OHIM -v- Wm Wrigley Jr Company Case C-191/01, Advocate General's Opinion, April 2003
Wrigleys applied for DOUBLEMINT as a Community Trade Mark for chewing gum and other goods. The application was refused, but on appeal, the Court of First Instance found the mark not to be exclusively descriptive, as its precise meaning was unclear: it could refer to extra mint flavouring or, alternatively to two different types of mint flavouring. Therefore the meaning was suggestive and ambiguous and open to various interpretations and the mark should be capable of registration. OHIM appealed to the ECJ. In this Opinion, the Advocate General recommends against registration. He finds that a multiplicity of meanings does not necessarily render it impossible for a term to designate a characteristic of the goods in question. He acknowledges that there is no clear cut distinction between signs which indicate a characteristic and those which merely allude to it. He further states that in his view the "BABY-DRY judgment has been widely misunderstood". He stands by BABY-DRY on the grounds that it is far more of a "lexical invention" than DOUBLEMINT where creativity is limited to joining together two words that may well be used together descriptively.
CYCLING IS, Appointed Person, 28 November 2001
The applicant applied to register CYCLING IS as a UK mark in relation to clothing and other articles related to cycling. The applications were opposed by Halfords on the grounds that the marks were devoid of distinctive character and further consisted exclusively of signs which might serve in trade to designate the characteristics of the goods in question. The Registry allowed the opposition, which was upheld by Geoffrey Hobbs QC sitting as the Appointed Person. Mr Hobbs said that BABY-DRY dealt only with Article 7(1)(c) of the Regulation and that this did not necessarily prevent the separate application of Article 7(1)(b) [devoid of distinctive character]. He found the marks not to be sufficiently striking so as to indicate trade origin under Section 3(1)(b).
Identical/similar marks
LTJ Diffusion SA -v- Sadas Vertbaudet SA- Case C-291/00, 20 March 2003
LTJ Diffusion designed, manufactured and sold clothing and footwear. It owned a registered trade mark for the word ARTHUR in a handwritten signature form filed at the French National Registry. Sadas was a company operating a mail order business including sale of clothing. It owned a French trade mark which postdated LTJ Diffusion's mark for the words ARTHUR ET FELICIE (not in signature or logo form). LTJ Diffusion brought an infringement action against Sadas. It argued that where its whole mark had been reproduced together with additional elements deemed not to affect its identity, this was an "ineffective addition" and gave rise to an infringement on the basis of identical mark (rather than similar mark). The French Courts referred the case to the ECJ asking: "Does the prohibition in Article 5(1)(a) of Directive 89/104 of 21 December 1988 to approximate the laws of the Member States cover only identical reproduction, without addition or omission, of the sign or signs constituting a mark, or can it extend to:
- reproduction of the distinctive element of a mark composed of a number of signs;
- full reproduction of the signs making up the mark where new signs are added?
[Article 5(1)(b) of the Directive covers similar rather than identical marks in which case the likelihood of confusion has to be shown.]
The issue to be decided was what is meant by "a sign which is identical with the trade mark". The view of the UK Government in argument was that a narrow view needed to be taken of "identical". Absolute protection is granted concerning an identical sign and it is not necessary under the Directive to show a likelihood of confusion, which pointed to a strict interpretation. Therefore when the marks are compared, if the sign used differs from the mark as registered in that it contains additional distinctive elements, the sign and the mark should not be regarded as identical.
The Court re-stated the essential function of a trade mark, being to guarantee the identity of origin of goods to the consumer by enabling him, without confusion, to distinguish goods or services from others. The trade mark proprietor must be protected against competitors wishing to take unfair advantage of the status and reputation of the mark by selling products illegally bearing it (the Arsenal case was cited). Therefore the criteria of identity between the sign and the trade mark must be interpreted strictly.
However the Court went on to say that the perception of identity must be assessed globally in relation to the average consumer who is deemed to be reasonably well informed, observant and circumspect. The reasonable consumer rarely has a chance to make direct comparisons between signs and trade marks and also his level of attention is likely to vary according to the goods in question. Therefore, insignificant differences between the sign and the trade mark may go unnoticed by an average consumer. The answer to the question posed was that "a sign is identical with the trade mark where it reproduces, without any modification or addition, all the elements constituting the trade mark, or where, viewed as a whole, it contains differences so insignificant that they may unnoticed by an average consumer".
English law had not been entirely clear on this point, but the more traditional view had been that replication of a mark by a sign could be an infringement of an identical mark even if additional matter were added. Also the ECJ Judgment contemplates a finding of identity when in fact the marks are not absolutely identical, which seems odd.
AAH Pharmaceuticals Limited -v- Vantagemax plc, High Court, 17 April 2002
The claimant was a wholesale distributor of pharmaceutical products to a chain of independent retail pharmacies that subscribed to its scheme. The claimant held the trade mark VANTAGE in respect of "operating Incentive schemes, advice and information thereto". The defendant operated a loyalty card scheme under the name "Vantage Rewards" where consumers gained points by making purchases at participating retailers.
The claimant applied for summary judgment on its action for infringement of the trade mark under s10(1) of the Trade Marks Act 1994 on the grounds that "Vantage Rewards" was identical to the registered trade mark "VANTAGE". The defendant counterclaimed for revocation of the claimant's mark for non-use.
Summary judgment was granted against the defendant for infringement under s10(1) of the Trade Marks Act 1994. The court was merely required to construe the meaning of the words "incentive scheme". Whilst that meaning might be potentially wide there was no difficulty in construing the words as encouraging people in some activity. Since the defendant's scheme involved the provision of a large number of different incentives in respect of a number of activities it clearly did fall within the specification of the mark.
Moreover the word "Vantage" comprised the defendant's sign and the word "Rewards" was merely descriptive. In those circumstances the sign was identical to the mark.
Summary judgment was not granted on the counterclaim for revocation for non-use. It would be unjust to the defendants for that issue to be determined by summary judgment and accordingly the issue would go to trial.
It is questionable as to whether this judgment is now consistent with the ECJ's judgment in ARTHUR e FELICE (above).
Thomson Holidays Limited v Norwegian Cruise Line Limited, Court of Appeal, 17 December 2002
Thomson owned trade marks for FREESTYLE relating to travel, accommodation and catering services, including, expressly, cruises. They alleged that the defendant had infringed their marks by promoting cruises under the same mark. In the High Court it was found that Thomson had not used the mark to promote or offer cruises for the relevant five year period (see section 46 of the Trade Marks Act) and that the mark should be amended so as to exclude services relating to cruises, Thomson appealed, arguing that it had used the mark in relation to one day boat tours as part of a package holiday (although not admittedly in the sense of a cruise style holiday).
The Court of Appeal allowed the appeal. It found that the mark should not be revoked as far as cruises were concerned but that the specification should be amended so as to make clear that the cruise services were all in relation to package holidays. The specification should be limited to reflect the particular trade carried out by the proprietor and the way in which the public would perceive the use of the mark. This should be done by reference to an average reasonably informed consumer. The average consumer would describe all services provided by Thomson as package holidays and for this reason wording should be added to the effect that all services were for package holidays.
The defendant was using the FREESTYLE mark relating to package holidays, albeit involving cruises on a cruise ship. The Court of Appeal upheld the High Court's finding that FREESTYLE CRUISING and NCL FREESTYLE CRUISING were both use of the registered mark FREESTYLE. For this reason there was infringement under section 10(1) of the Trade Marks Act (identical marks/identical services). Also even if the specification had been amended so as to exclude cruises on cruise ships there would have been infringement under section 10(2) relating to identical marks/similar services given a likelihood of confusion. Although FREESTYLE did not have a strong distinctive character as a mark, when viewing its use in a fair and normal way in respect of the services offered by both parties, and bearing in mind that the same trade channels and possibly the same brochures were used, there had to be some risk that an average consumer would conclude the defendant's cruises came from either the same or from an economically linked company.
The Court of Appeal had found that the High Court Judge had failed to follow guidance given on likelihood of confusion by ECJ case law. This is most recently set out in the case of Lloyd Schuhfabrik Meyer & Co. GmbH –v- Klijsen Handel B.V., Case C-342/97. This and previous ECJ case law makes clear that the concepts of similarity of mark and similarity of goods and services should be considered not separately but rather in the round in making a general assessment as to the likelihood of confusion. Also, if a mark has a very distinctive character then confusion might be likely even though the claimant's/defendant's goods are not as similar to each other as in some other cases.
The Arsenal case
Arsenal Football Club plc -v- Matthew Reed, Court of Appeal, 21 May 2003
The defendant, Mr Reed, had sold football memorabilia bearing the Club's trade marks from outside the grounds of the Club for over 30 years. He sold a small amount of "official" merchandise but largely sold "unofficial" merchandise bearing the Club's marks. Mr Reed displayed on his stand a prominent disclaimer relating to unofficial goods which made clear that they were not official merchandise. The Club had in the past succeeded in stopping some dealings in unofficial merchandise via criminal proceedings brought by Trading Standards authorities. However, in this instance it appeared that the local London council concerned was unwilling to become involved. The Club alleged trade mark infringement based on their trade mark registrations and passing off.
Mr Reed argued that he was not using the Club's trade marks within Section 10 of the Trade Marks Act 1994, and alternatively, that the marks were incapable of distinguishing the Club's goods in a "trade mark sense". He claimed that he used the marks as "badges of allegiance" rather than as a trade source. The passing off claim was also denied. Mr Reed argued that those consumers caring about the origin of his goods would know that they were unofficial and that in any event most consumers had no interest in their origin at all.
High Court decision – April 2001
The claim in passing off failed as there was no convincing evidence of confusion and the onus was on the Club to show likelihood of deception and relevant damage. Given the length of time during which Mr Reed had traded, the lack of evidence was telling. In relation to the unofficial products, no significant numbers of customers would reasonably think that Mr Reed was selling licensed products except when they were expressly so marked. This was supported by the Club's own activity in carefully distinguishing between "official" and "unofficial" goods and the warnings which it gave to fans concerning unofficial goods.
Concerning registered marks the Court's view was that Mr Reed was not using the Club's marks in a "trade mark sense" to indicate trade origin but as badges of support and affiliation to the Club. It was unclear under the Trade Marks Act 1994 as to whether a defendant infringed only if he used the trade mark "as a mark" (which had been the position under the previous legislation). For this reason the case was referred to the ECJ.
The ECJ decision – November 2002
In a clearcut judgment the ECJ had decided that trade mark registrations are enforceable against unlicensed use in the course of trade on goods for which registrations are held, whether or not consumers regard the mark as a "badge of support" rather than a trade origin. However such protection would be limited to cases where use of a sign by a third party affected the function of a trade mark, in particular in guaranteeing origin.
The ECJ went on to make clear its view that on the facts of this case the guarantee of origin was adversely affected and infringement had occurred. Although there was no proven confusion on the part of the public and Mr Reed had used a disclaimer on his stall, the risk of confusion could not be ruled out, particularly as the goods may have been taken to be official merchandise once they were removed from his stall. This meant that the guarantee of origin was adversely affected.
Return to the High Court – December 2002
It had been assumed that the hearing in the High Court would be a foregone conclusion in the light of the ECJ's firm judgement. However, Mr Justice Laddie decided that in examining the facts the ECJ had exceeded its jurisdiction, it being the task of the national courts only to apply principles of law to the facts of the case. On this basis he found that he was not bound by the ECJ's conclusion, stating "I must apply its guidance on the law to the facts as found at the trial".
He therefore disregarded the ECJ's findings of fact and substituted his original (different) findings, ie. that Mr Reed's goods carried no message of trade origin. This led to the conclusion that the guarantee of origin attached to Arsenal's trade marks was unaffected by Mr Reed's activities and that an infringement had not occurred.
Mr Justice Laddie was clearly uncomfortable with this result, saying that it was in no-one's interests for "there to be such a difference between the views expressed by the High Court and the ECJ". He refused another reference to the ECJ and confirmed that the correct course would be an appeal to the Court of Appeal.
In the Court of Appeal – May 2003
On 21 May the Court of Appeal ruled in favour of Arsenal. It agreed that Mr Justice Laddie had acted correctly is not believing himself to be bound by the ECJ's findings on the facts, the jurisdiction of the ECJ being limited to guidance on questions of law. However the Court of Appeal found that Mr Justice Laddie had not interpreted the ECJ's judgment correctly. Lord Justice Aldous said:
"…the result reached by the ECJ was inevitable once their judgment had made it clear that the material consideration was whether the use complained of was liable to jeopardise the guarantee of origin, not whether the use was trade mark use. The judge should have followed the ruling and decided the case in Arsenal's favour."
Although it was not strictly necessary to go on to determine whether in fact Mr Reed's use was trade mark use, the Court of Appeal considered the issue. It found that use of the marks did denote origin and constitute trade mark use, notwithstanding the fact that the marks also operated as "badges of allegiance". The incidences of confusion highlighted in the evidence which the Judge had dismissed as de minimis were probably the "tip of the iceberg". Further, the use of a disclaimer by Mr Reed pointed to the conclusion that, absent the disclaimer the ARSENAL mark would denote origin.
The Court of Appeal has steered a careful course between supporting Mr Justice Laddie's approach where possible, and equally, adhering to the authoritative and clearcut ruling of the ECJ. The hand of brand owners has been greatly strengthened by the decision and despite press reports of a possible appeal to the House of Lords, it is now difficult to see the basis for a further round of legal argument.
Civil/criminal overlap
R v Johnstone, House of Lords, 22 May 2003
Mr Johnstone had been found in possession of bootleg recordings on CDs which were labelled with the names of the relevant artists. He was convicted of the false use or application of the trade marks belonging to the artists under section 92(1)(c) of the Trade Marks Act 1994. The Court of Appeal then ruled that his conviction was unsafe because he had not been allowed at trial: (a) to argue that his use of the trade marks did not constitute a civil infringement and therefore could not be a criminal offence; and (ii) to rely on the defence of honest and reasonable belief under s.92(5) of the Act.
The House of Lords dismissed an appeal by the Crown against the Court of Appeal decision and made clear that for an offence to be committed under section 92 of the Act, the use of the trade mark in question must be use as an indication of trade origin, rather than purely descriptive use. If the name of the artist affixed to the CD was exclusively an indication of that name, then such use would be purely descriptive. Also, the reasonable belief defence under s.92(5) was available to an alleged offender whether or not they were aware of the existence of the relevant registered trade mark.
Passing off
Irvine & Ors v Talksport Limited, Court of Appeal, 1 April 2003
Eddie Irvine the racing car driver brought an action against a radio station called Talksport (formerly Talk Radio) who had distributed a brochure featuring a photograph of Eddie Irvine which had been legally obtained. However, the photograph had been "doctored" to remove his mobile telephone and to replace it with a radio with the words "Talk Radio". In the High Court Eddie Irvine succeeded in an action for passing off on the basis that the brochure created the misrepresentation that he had endorsed the radio station. However, an award of damages of only £2,000 was made. Eddie Irvine appealed the amount of the award, contesting that £25,000 was an appropriate amount. The radio station appealed on the issue of liability.
The finding of passing off was upheld. The Court commented that the humorous nature of the image did not affect the impression which was given and the image on the brochure was a very clear representation that Eddie Irvine had endorsed the radio station.
The appeal on damages was also upheld and the High Court Judge found to be clearly wrong. Irvine had put in evidence to show that he would not have signed an endorsement deal for less than £25,000 and also details of previous endorsement deals. There was no reason to doubt this evidence and it had been unchallenged; therefore the appropriate award was £25,000.
The appeal was of greater significance on costs: Eddie Irvine had originally turned down an offer to settle of £5,000 and consequently, following the original award of £2,000 he faced legal costs of hundreds of thousands of pounds, which the defendant will now have to pay.
Other developments
UK Trade Mark Registry consultations at www.patent.gov.uk
EU enlargement: Community Trade Mark guidance at www.oami.eu.int
Contact point:
Lucy Kilshaw
CMS Cameron McKenna
T: +44(0) 20 7367 2044
lucy.kilshaw@cms-cmck.com
