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Date: 21 May 2018

The subtlety of the assessment of the overall impression given by opposing signs for the purposes of determining likelihood of confusion is illustrated by a recent decision of the General Court (Starbucks Corp v EUIPO; T-398/16).

 

Ms Hasmik Nersesyan filed an application for registration of the figurative sign shown below as an EU trade mark for "Services for providing drinks" in Class 43:

 

The application was opposed by Starbucks, based on a number of EU and national figurative marks, including a UK mark.  One of the EU marks, registered in 1999, is shown below:

 

The EUIPO’s Opposition Division rejected the opposition in its entirety.  The Fourth Board of Appeal upheld that decision finding that "overall, the marks [were] dissimilar".  Starbucks applied to the General Court to annul the Board's decision.

 

The court said the Board was wrong to find that Starbucks' earlier device marks were dissimilar.  On that basis the Board was also wrong not to carry out an assessment of likelihood of confusion under Article 8(1)(b) of the EUTMR and not to consider whether the average consumer would establish a link between the opposing marks for the purposes of unfair advantage or dilution under Article 8(5) of the EUTMR.

 

While distinctive and dominant elements are key, descriptive elements should not necessarily be discounted altogether. Once the Board had decided that there was no similarity at all between the opposing signs where in fact there was some (regardless of whether that was sufficient to give risk to a likelihood of confusion), it was bound to compound that error by failing to assess whether the average consumer would make a connection between the signs for the purposes of Article 8(5) based on some similarity and other relevant factors such as the reputation of the earlier mark.

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Care to take a punt on whether the term BET 365 can be protected as an EU trade mark?  It's been an ongoing question for over a decade, and recently reached the European General Court for consideration (Bet 365 Group v EUIPO; T-304/16).

Registration of a EUTM in respect of the word mark BET365 was sought by Bet365 Group Ltd (a gambling and betting company established in the United Kingdom) for gambling and betting services in Class 41, along with a wide range of goods and services linked to gambling and betting in Classes 9, 28, 35, 36 and 38. 

 

Initially, the application was rejected because the examiner thought that the average English-speaking consumer would understand that the term BET 365 referred to the availability of “all-year-round betting”.   It was later accepted for registration but, shortly afterwards, the intervener in the present action (a German individual named Robert Hansen) challenged it for invalidity, on the basis that it lacked distinctiveness and was descriptive. 

 

The court decided to limited the territorial scope of the exercise to Member States in which a large part of the consumers spoke or understood English (Chocoladefabriken Lindt & Sprüngli v OHIM; Case C-98/11 P applied.

 

The court found that the Board had paid insufficient attention to the evidence and the specific uses made, especially the evidence that showed how the public would perceive the use of BET 365 in the domain name www.bet365.com.  The court said that “it is reasonable to consider that, except with regard to certain new players or betters for whom the experience is new, a customer who connects to the applicant’s website at ‘www.bet365.com’ does not do so by chance and uses the contested mark or its derived marks to identify services offered by the applicant, as opposed to services offered by its competitors, in the same way as a customer returning to a shop whose sign corresponds to the mark of the goods and services that he is looking for, which are sold there”.

 

The court found that the website analytics together with the press releases, market share and financial figures, showed that use as part of the domain name was sufficient to demonstrate acquired distinctiveness for their main activities, namely betting and gambling services (and other gambling activities in class 41).  Accordingly, the court annulled the Board of Appeal’s decision in respect of class 41. 

 

This partial annulment of the Board’s decision illustrates that the General Court recognises that, when it comes to assessing a mark that could be descriptive in English, an unduly significant burden could be placed on the applicant should they have to prove acquired distinctiveness in all Member States in which the relevant public has, in the words of the EUIPO, “at least passive knowledge of English”.  On the flip side of the coin, this decision also shows the importance of giving as much supporting information concerning the extent of use as possible, given that the EUIPO and the court both require a certain level of detail in order to satisfy the threshold; for example, Bet365 submitted details of its advertising at football grounds, which it said was seen in the whole of the European Union on television.  However, the Board and the court rejected this evidence, on the basis that it did not in fact provide sufficiently precise information concerning the broadcasting of that advertising in various countries of the European Union: “All that is indicated is overall broadcast transmission times for the whole of the European Union, which does not allow any distinction to be made between countries”.  Although they were unable to show acquired distinctiveness for the rest of the wide range of goods and services applied for, this decision still gives the Bet365 Group Ltd protection for their core business.

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The meaning of “establishment” for the purposes of the EU Trade Mark Regulation (207/20009/EC) (“EUTMR”) jurisdiction provisions was interpreted for the first time by the Court of Justice of the European Union (CJEU) in a David and Goliath dispute between sportswear manufacturers (Hummel Holding A/S v Nike Inc, Nike Retail BV; C-617/15).

 

The Danish sports and leisure apparel company, Hummel Holding AS, owns the following international trade mark (EU), registered for "Clothing, footwear and headgear" in Class 25 (the "chevron mark"):

 

Hummel brought an action before the German courts against the Nike Group for selling sportswear items, particularly basketball shorts, which it claimed infringed its trade mark.  The problem it faced was that, under Article 97(1) EUTMR, in order for the German courts to declare jurisdiction to hear about the infringement committed in the whole territory of the EU, the defendant should be domiciled or have an establishment in Germany.  However, in this particular case:

 

  • Nike Retail BV (domiciled in the Netherlands) operated the website www.nike.co/de (on which Nike products were advertised and offered for sale in Germany and elsewhere) and supplied independent dealers who sold Nike products in Germany. 
  • The Nike Group had no companies in Germany which directly conducted wholesale or retail services.
  • Based in Frankfurt, Nike Deutschland GmbH (a subsidiary of Nike Retail) provided pre- and post-sale services.

 

The German Regional Court found that it had international jurisdiction with respect to the entire EU on the basis that Nike Deutschland was an establishment of Nike within the meaning of Article 97(1), thereby creating a link between the US defendant and Germany.

Hummel appealed to the German Higher Regional Court, who sought guidance from the CJEU.

 

Since a defendant, who was not domiciled in the EU, could have one or more establishments in the EU, the CJEU reasoned that legal proceedings may be issued in those courts where the defendant’s establishments were located.

 

The CJEU agreed with the Advocate General’s opinion that the notion of “establishment” for the purpose of Article 97(1) implemented the basic rule of jurisdiction set out in recital 11 and Article 2(1) of Regulation 44/2001 ("Brussels I"), namely that jurisdiction is generally based on the defendant's domicile. 

 

The CJEU concluded that a legally distinct second tier subsidiary (with its seat in a Member State) of a parent body (with no seat in the EU) was an “establishment” for the purposes of Article 97(1) of the EUTMR, where that subsidiary was a centre of operations which, in the Member State where it was located, had a certain real and stable presence from which commercial activity was pursued, and had the appearance of permanency to the outside world, such as an extension of the parent body.

 

There is a clearly a balance to be struck here between on the one hand strengthening the rights conferred by the EU trade mark, and on the other hand reducing options for so-called “forum shopping” in trade mark infringement cases.

 

This decision makes it arguably easier for EUTM owners and owners of international marks designating the EU, to commence proceedings for trade mark infringement against companies with a tiered corporate structure, specifically those with a parent company located outside the EU and a legally distinct second-tier subsidiary within the EU.  Although there is a difference between a first-tier and a second-tier subsidiary with respect to corporate structure, when it comes to international jurisdiction under European trade mark law what matters is whether that subsidiary is a centre of operations.

 

For those non-EU multinationals that have several “establishments” in multiple Member States, the present case presents a risk in that it increases forum shopping options and also a certain amount of unpredictability, given that there is no additional requirement that a qualifying second-tier subsidiary needs to have participate in the alleged infringement.  For example, in this particular case, Nike Inc. may be sued in Germany for infringements committed by Nike Retail although no infringement was committed by its German subsidiary, Nike Deutschland.

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The issue of jurisdiction raised its head again in another referral to the CJEU, this time by the English Court of Appeal (AMS Neve Ltd v Heritage Audio SL [2018] EWCA Civ 86).  In this particular case, the question was can you sue someone based in another EU Member State for trademark infringement in the UK if they advertise and offer for sale products bearing your trade mark through a website targeted at the UK?  If it's a UK trade mark, then it's crystal clear that you can.  If it's an EU trade mark, however, the situation is muddier.

 

The claimants (collectively “AMS Neve”) are based in England where they make a range of audio equipment which they sell in the UK and elsewhere.  They own an EU trade mark in the form of the digits "1073" and two other logo marks registered in the UK incorporating a stylised sine wave, all registered for goods in Class 9 associated with sound recording and processing.

 

The defendants (collectively “Heritage Audio”) are based in Spain where they also sell audio equipment.  However, they have a website (“the Heritage Audio website”), which AMS Neve claimed was targeted at the UK and the wider EU market.

 

Back in October 2015, AMS Neve issued proceedings for trade mark infringement and passing off on the grounds that Heritage Audio was manufacturing and selling a look-and-sound-a-like “1073” on its website:

 

The Heritage Audio website stated:

 

“The name says it all – first introduced by Neve in 1970……. We are proud to introduce what, to our knowledge, is the most historically accurate reproduction ever made. Using the same components, specifications and equally important, same time consuming construction techniques, our 1073 looks and sounds as good as a Rupert Neve era 1073 module and will last as long”.

 

At first instance ([2016] EWHC 2563 (IPEC)),  Judge Hacon held that a distinction had to be drawn between, on the one hand, UKTMs and passing off and, on the other hand, EUTMs.  In respect of the UKTMs and passing off, the judge found that the IPEC did have jurisdiction to hear the claims pursuant to the special jurisdiction provisions of Article 7 of the Recast Brussels Regulation (1215/2012/EU).  However, in relation to the EUTM, the judge held that the position was governed by the EUTMR. 

 

On appeal, Lord Justice Kitchin took a different view.  He considered it "strongly arguable" that the IPEC did have jurisdiction, in its capacity as an EU trade mark court, to hear a claim of EUTM infringement based on the advertisement and offer for sale in the UK through a website of audio products bearing the offending sign.  The acts complained of, he said, had been performed within the territory of the Member State in which the court was situated.

 

However, as the meaning of “the Member State where the act of infringement has been committed” in Article 97(5) of the EUTMR had not been decided by the CJEU, Kitchin LJ decided to refer the following questions to the CJEU for a preliminary ruling:

 

"In circumstances where an undertaking is established and domiciled in Member State A and has taken steps in that territory to advertise and offer for sale goods under a sign identical to an EU trade mark on a website targeted at traders and consumers in Member State B:

 

does an EU trade mark court in Member State B have jurisdiction to hear a claim for infringement of the EU trade mark in respect of the advertisement and offer for sale of the goods in that territory?

 

if not, which other criteria are to be taken into account by that EU trade mark court in determining whether it has jurisdiction to hear that claim?

 

insofar as the answer to (ii) requires that EU trade mark court to identify whether the undertaking has taken active steps in Member State B, which criteria are to be taken into account in determining whether the undertaking has taken such active steps?"

 

The outcome of this case is of vital importance for TM owners, as confirmation of the proposal that the advertising and offering for sale of products bearing their marks on a website targets a particular jurisdiction can constitute the commission of an infringing act within that jurisdiction for the purposes of Article 97(5) of the EUTM would clear the way for TM owners to take action through the English courts against operators based in other Member States.

 

Merck KGaA v Merck Sharp & Dohme Corp [2017] EWCA Civ 1834 (24 November 2017).

In its recent decision in Merck KGaA v Merck Sharp & Dohme Corp, the Court of Appeal considered the question of whether a website (or part of it) was “targeted” at the territory in question and provided useful analysis and clarification of the approach to be taken in relation to trade mark infringement and online targeting, particularly in the context of global websites with UK specific content.  

 

On appeal from a decision of Norris J concerning a dispute about the use of the word "Merck" in connection with the parties' respective pharmaceutical businesses, the Court of Appeal held that the judge was entitled to find that the defendants had breached a coexistence agreement by using "Merck" in the UK as a business name and as a trade mark in an impermissible way, and had infringed UK registered trade marks for MERCK. In particular, the judge was entitled to find that the defendants' websites and social media activities had been targeted at users in the UK. However, Lord Justice Kitchin found that the judge had failed to assess the full extent of the trade mark infringement by failing to consider all uses of the word "Merck" by the defendants and whether the use was in fact de minimis and so not actionable. Kitchin LJ also found that the judge had denied the defendants an opportunity to make representations about the granted injunctive relief, and failed to give adequate reasons for making an order in the terms that he did. Accordingly, the case was remitted to the High Court for reassessment.

 

This judgment illustrates the current case law position on the issue of targeting.  Merck US conducted their healthcare business in many countries around the world, including the UK, and that business was at all material times supported and promoted by the websites in issue.  Those websites constituted an integrated group, accessible by and directed at users in the UK and other countries in which Merck US traded. Moreover, the social media activities of Merck US were also integrated with and supportive of the websites and Merck US’s business generally and were directed at persons and businesses in the UK in just the same way as the websites.

 

Can a pre-IP Translator, pre-Praktiker registration for the Class 35 heading be regarded as protected for retail services?  What’s the legal effect of the EUIPO’s Communication No. 2/12 on unamended old specifications?  Can the use of only the figurative element of a figurative mark really constitute genuine use?  Such questions were considered by the CJEU, in the course of their dismissal of the EUIPO’s appeal against a decision by the General Court in an opposition case concerning the figurative EUTM shown below for goods and services in Classes 31, 39 and 44:

 

Cactus SA, a Luxembourg company, opposed the application based on its earlier EUTM registrations for the word mark CACTUS (registered in 2002) and figurative EUTM for CACTUS (registered in 2001):

 

The earlier Cactus marks covered a variety of goods and services, including "Advertising, business management, ... business administration, office functions..." services in Class 35.

In 2011, the Opposition Division upheld the opposition.  However, the EUIPO’s Second Board of Appeal dismissed the opposition in its entirety.   Cactus applied to the General Court to annul the Board’s decision.

 

The General Court annulled the Board’s decision to reject the opposition on the grounds that a number of services in Class 35 (retail trade of plants, flowers and grains, among others) did not fall within the scope of the mark CACTUS.  The General Court also annulled the Board’s decision to reject the opposition that there was no genuine use in Class 31 (plants, flowers and grains).

 

EUIPO appealed, claiming that the General Court had erroneously interpreted the judgments in Case C-307/10 IP Translator and Case C-418/02 Praktiker Bau, by ruling that those decisions did not have retroactive effect. 

 

In the opinion of the CJEU, the General Court had correctly ruled that the case-law resulting from the judgments did not apply to earlier marks, and so could not alter the scope of protection of the earlier marks.  IP Translator provided clarification only on the requirements relating to new EU trade mark registration applications, and so did not concern trade marks that were already registered, such as the CACTUS word mark and the CACTUS figurative mark.

 

It followed that the General Court had been right to hold that, for the earlier CACTUS trade marks, the designation of the class heading of Class 35 of the Nice Agreement covered all the services included in that class, including services consisting of the retail of goods.

 

The EUIPO also argued that the General Court's ruling on genuine use breached Articles 42(2) and 15(1) EUTMR, because the General Court had found that the use of an abbreviated from of the figurative mark, which omitted the word element, did not alter the distinctive character of the figurative trade mark as registered:

 

Trade mark as used

Trade mark as registered

   

 

As to genuine use, the CJEU held that the use of a trade mark in a form that differed from the form in which it was registered was regarded as use within the meaning of Article 15(1), provided that it did not alter the distinctive character of the mark.  By not imposing strict conformity between the form in which the trade mark was used and the form in which the mark was registered, Article 15(1) allowed the mark to be better adapted to the marketing and promotion requirements of the goods or services concerned. 

 

In this latest decision, the CJEU had now confirmed that the authority derived from the judgment in IP Translator does not affect trade mark registrations that were already made on the date of the judgment and that the scope of protection for such marks could not be altered by a non-binding communication on EUIPO practice, i.e. Communication No 2/12.

 

In addition, this decision sets a case law precedent for genuine use. Although the word element of a figurative mark is usually seen as the dominant element, the CJEU has made it clear that this does not apply to all cases; particularly in instances where the verbal and figurative elements convey the same meaning.

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Failure to assess the strength of an earlier mark proved fatal for the Board of Appeal in a recent decision of the General Court (PP Gappol Marzena Porczyńska v EUIPO; T-411/15 PP). 

In June 2009, Gappol applied to register the following figurative sign as a EUTM for furniture in Class 20 and various types of clothing in Class 25:

 

Gap opposed the application on the basis of several earlier word marks and figurative marks including the EU word mark GAP, registered for "Clothing, footwear, headgear" in Class 25. 

 

Partially upholding the opposition, the General Court confirmed that there was a likelihood of confusion between the marks and that the Board had therefore correctly refused registration insofar as it concerned various types of clothing in Class 25.  The marks were of average visual and phonetic similarity, thanks to the shared element “gap”. For the part of the relevant public who understood English or Swedish, the marks were also conceptually similar since gap means “a space between two things" in English and "open mouth" in Swedish. 

Crucially, the General Court noted that the Board did not specify the strength of the earlier mark's reputation and failed to identify the degree of distinctiveness of the earlier mark.  As a result, the Board had failed to rule on factors that must be considered as part of the application of Article 8(5).  The General Court therefore annulled the Board's decision insofar as it upheld the opposition for "furniture" in Class 20 on the basis of Article 8(5).

 

The degree of similarity between the respective marks and goods or services, and the degree of distinctiveness and reputation enjoyed by the earlier well-known mark are factors that must be assessed in a reputation-based trade mark infringement case.  The Board effectively skipped a step, and the General Court confirmed that was not the way to go about applying Article 8(5).  The Board's failure to assess the strength of the reputation and degree of distinctiveness of the GAP mark were fatal omissions.  Owners of reputable brands should note the consequences of letting that happen in instances where, in the words of the court, "assessment of the link between the signs at issue is likely to vary according to the strength of the reputation".

 

Also, the General Court pointed out that, although the use of a well-established brand name for a new product or new product category might be regarded as common-place in the real world, such “brand-extension” does not mean that there will be a close proximity between the relevant goods as far as the law is concerned.  Irrespective of the fact that several reputable trade marks have extended their range from clothing to furniture under the same trade mark, the General Court explained that "furniture" in Class 20 and "clothing, footwear, headgear" in Class 25 are “not complementary and it is not common for them to be offered for sale in the same retail outlets or, in the case of sales in department stores, in the same departments”.

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In a dispute between two tyre giants, the Court of Justice of the European Union held that a slightly stylised single letter X, although only weakly distinctive, could still prevent the registration of Continental’s stylised XKING mark on the basis of a likelihood of confusion with Michelin's earlier French "X" figurative mark (Continental Reifen Deutschland v Compagnie générale des établissements Michelin; C-84/16 P). 

 

Continental Reifen Deutschland (Continental) applied to register the following figurative sign, as revised and amended, for "Tyres; Inner tubes for types" in Class 12:

 

Michelin opposed the application based on, amongst others, its earlier French figurative mark for "Envelopes, inner tubes for pneumatic tyres" in Class 12, as shown below:

 

EUIPO's Opposition Division upheld the opposition, but EUIPO's Fourth Board of Appeal allowed Continental's appeal and rejected the opposition in its entirety.  However, Michelin won before the General Court. 

 

It was not disputed that the relevant goods were highly similar or identical.  The CJEU dismissed Continental’s attempts to reargue the General Court’s finding that the marks had an average degree of visual and phonetic similarity and, in doing so, essentially upheld the General Court's decision that the marks had an average degree of similarity.  The CJEU accepted Continental's contention that the General Court distorted certain evidence submitted by Michelin regarding the interpretation of the stylised letter "x" in its earlier French trade mark: the evidence clearly indicated the stylised letter "x" was used, whether in isolation or in combination with other letters, to designate a technical characteristic of Michelin tyres, namely their tread pattern.   The CJEU also accepted that, since the General Court based its assessment of the inherent distinctiveness of the earlier French trade mark on distorted evidence, it erred in law and had been wrong to find that that mark had a normal distinctiveness.

 

However, the CJEU went on to point out that an error in law by the General Court did not invalidate the judgment under appeal if "the operative part" of that judgment was well founded on other legal grounds.

 

Continental's successful challenge of the General Court's assessment of the inherent distinctiveness of the stylised "x" in Michelin's French trade mark effectively had little traction, as the CJEU decided that its error in law regarding the distinctiveness of the earlier mark “could not lead to the setting aside of the judgment” and was “irrelevant”.

 

Practically speaking, Michelin's single letter (albeit stylised) trade mark was found to have a broad monopoly.  Referring to Case C-265/09 P OHIM v BORCO-Marken-Import Matthiesen EU:C:2010:508, the CJEU clarified that single letters are less likely prima face to have distinctive character initially but that there is no general rule that the distinctiveness of such letters must, in all cases, be considered to be weak. Like any other mark, the distinctive character of a single letter must be assessed specifically by reference to the goods or services designated.

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On a reference from the Spanish Provincial Court of Alicante , the CJEU was asked to address the question of whether  an absence of a likelihood of confusion in one part of the EU could be extended to another part of the EU where there was no peaceful coexistence (Ornua Co-operative Ltd v Tindale & Stanton Ltd España SL; Case C-93/16).  The CJEU ruled that infringement of a sign in another EU member state couldn’t be based solely on peaceful co-existence in Ireland and the UK, but rather must be made on a global assessment of all relevant factors.

 

The Irish trade association for dairy processors and dairy farmers, Ornua Co-operative Ltd (“Ornau”) owns several EUTMs, including the word mark KERRYGOLD registered for goods in class 29, particularly butter and other dairy products, and the following figurative marks for the same class of goods (collectively, the KERRYGOLD EUTMs):

 

Back in 2014, the Irish Dairy Board Co-operative (Ornua’s previous incarnation) commenced proceedings against Tindale & Stanton Ltd España SL (T&S), the Spanish importer and distributor of KERRYMAID margarine, which is manufactured in Ireland by Kerry Group plc, the owner of the national word mark KERRYMAID in both Ireland and the UK.

 

T&S claimed that the sign used by it in Spain was not similar to the KERRYGOLD marks and could not give rise to a likelihood of confusion since the element "Kerry" referred to an Irish county known for cattle breeding and so was an indication of geographical origin.  It was common ground between the parties that the KERRYGOLD EUTMs and the KERRYMAID national trade marks had peacefully coexisted for some years in Ireland and the UK, but not in Spain.

 

The first instance court dismissed the infringement action.  Ornua appealed to the Spanish Provincial Court of Alicante, which took the view that, if the peaceful coexistence between the KERRYGOLD EUTMs and the sign KERRYMAID in Ireland and the UK meant there was no likelihood of confusion in those two Member States, that did not rule out a likelihood of confusion between those marks and that sign in the other Member States. 

 

The Spanish court asked the CJEU for a preliminary ruling, who CJEU held that:

 

  • Article 9(1)(b) must be interpreted as meaning that the peaceful coexistence between an EUTM and a national mark in one part of the EU did not allow the conclusion that there was no likelihood of confusion in another part of the EU where that EUTM and the sign identical to that national mark did not peacefully coexist.
  • If the market conditions and the sociocultural circumstances were not significantly different between the part of the EU where the infringement action occurred and the part of the EU not covered by that action, the national court may consider the elements which are relevant for assessing whether the EUTM owner was entitled to prohibit the use of a sign in the part of the EU not covered by that action when determining whether that owner was entitled to prohibit the use of that sign in the part of the EU where the infringement action occurred.
  • The peaceful coexistence between a EUTM with a reputation and a sign in one part of the EU did not constitute "due cause" legitimising the use of that sign in another part of the EU where that EUTM and that sign did not peacefully coexist.

This case highlights the interplay of peaceful coexistence, brought on by consent or acquiescence, and the rights conferred on the EUTM owner under Article 9 of the EUTMR, specifically in relation to likelihood of confusion.  While EUTMs have unitary effect throughout the entire territory of the EU, the owner's acquiescence leading to coexistence in one part of the EU does not extend to "coexistence" in another part of the EU.  This means that third parties using a sign identical or similar to a EUTM should be alert to the possibility that they could be liable for trade mark infringement in one part of the EU, even if they have the owner's acquiescence in another part of the EU. 

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The EU General Court had to consider the issue of consent in a dispute was between Jerry Dammers (a keyboard player in the Ska band “The Specials”) and Windrush Aka LLP over genuine use of the EU word mark THE SPECIALS.  Back in 2012, Windrush Aka LLP filed an application for revocation of the mark, on the grounds of lack of genuine use under Article 51(1) EUTMR.   The EUIPO partially upheld the application and revoked the registration in respect of all classes, with the exception of “compact discs [audio video]” in class 9, on the grounds that the mark had been used with Jerry Dammers' consent by a third party, Chrysalis Records, and had been put to genuine use in connection with those goods.  In reaching its decision the Board referred in particular to an agreement dated 8 June 1979 between Mr Dammers and other artists, on the one hand, and Chrysalis Records, on the other hand, from which it concluded that that the use of the name "The Specials" by that company, giving rise to payment of royalties to Mr Dammers, had been made with Mr Dammers' consent.

 

Windrush appealed to the (European) General Court (Windrush Aka LLP v EUIPO; T-336/15) who rejected Windrush's case that letters and statements concerning royalties paid to Mr Dammers by third parties did not evidence genuine use with Mr Dammers' consent since he had assigned his rights in the band's name under that agreement. 

The case is typical of the havoc-wreaking scrimmages over the IP rights and goodwill subsisting in a band's name after the band has broken up and reformed.  The only surprise is that it took so long to come to a head where the sub-text in the General Court's judgment appears to be that Windrush believed Jerry Dammers did not have the right to register THE SPECIALS as an EU trade mark in the first place.

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In a dispute between FinTech companies Hub Culture and PayPal-owned Venmo (PayPal Inc v EUIPO; T-132/16), the EU General Court has annulled a decision of the EUIPO Board of Appeal, and found that Hub Culture Ltd did act in bad faith when it applied to register the word VENMO as an EU trade mark (EUTM).

 

In 2007, Hub Culture (a global social network service based in Hamilton, Bermuda) created "VEN", a virtual digital social currency which can be exchanged and traded either online or at physical premises operated by Hub Culture called "Pavilions".  In 2009, Hub Culture secured registration for the word VEN as a US trade mark for financial services in Class 36.  Incidentally, Venmo Inc was established in the US in that same month.  Venmo provides online payment services under the unregistered mark VENMO and allows individuals to complete transactions between themselves.  More recently, Venmo was acquired by the worldwide online payment behemoth, PayPal Inc.

In essence, PayPal claimed that the Board of Appeal erred in annulling the Cancellation Division’s decision on the ground that bad faith on the part of Hub Culture Ltd had not been established at the time of filing the application for registration of the word mark VENMO relating to goods in classes 9 (software) and 36 (financial tokens).  The General Court upheld the claim.

 

According to the General Court, the Board had failed to take into account all the relevant factors in reaching its decision that there had been a lack of bad faith on the part of Hub Culture.  Contrary to the Board's view, Hub Culture's registration of the sign VENMO did not follow a “logical commercial trajectory” from its subsisting rights in the US mark VEN.  Rather, it was a defensive registration made with no intent to use and without notice to Venmo with whom it had a pre-contractual relationship: there was correspondence both in writing via their respective legal representatives and in person between the two parties.  Immediately after meeting with Venmo for the first time, Hub Culture filed its application for registration without so much as informing them.  What's more, Hub Culture had never used the VENMO mark, prior to registration or after it, and Venmo had not ruled out the possibility of "going global" sometime in the future.

 

The facts indicated that Hub Culture registered the word VENMO as a EUTM in order to block Venmo (now PayPal) from entering the EU market, rather than protecting its interests in its VEN trade mark.  Given the sheer competitiveness of the FinTech industry, Hub Culture's efforts to register VENMO may have been seen, at least initially, as a clever move. Yet, the EUTM system is not built for defensive registrations. Rather, the registry is reserved for marks that are currently being used or, in due course, will be, and applies a "use-it-or-lose-it" principle as regards maintaining any given registration.   As this decision illustrates, a mark registered with the sole objective of preventing a third party from entering the market fails to fulfil its essential function.  In other words, such a mark cannot be protected as a trade mark.

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Would the use of a word mark in a trading name, such as “Technosport BMW” (see image of van), be likely to give the impression of a commercial connection between a trader and the brand owner associated with the mark?  That was the question before the Court in a recent UK appeal (Bayerische Motoren Werke AG v Technosport London Ltd [2016] EWCA Civ 779).

BMW brought a trade mark infringement and passing off claim against Technosport London Ltd, a company dealing in the repair and maintenance of cars (mostly BMWs), based in North West London, and against its sole director and shareholder, George Agyeton.  The defendants had no formal connection with BMW.  Three trade marks were relied on, all registered for, among other things, “maintenance and repair of cars etc” in Class 37: (i) an EU trade mark in the form of the letters BMW (the “BMW word mark”) and; (ii) an EU trade mark for the BMW “roundel” and (iii) an international registration designating the EU of the “M logo”:

 

 

The Court of Appeal found that the IPEC Judge had erred in deciding that BMW was required to adduce further evidence to establish that the juxtaposition of BMW with a dealer's name will convey the impression that the dealer is authorised.  An assessment of whether such use was misleading as opposed to merely informative did not turn on proof that whenever the average consumer sees the dealer's name juxtaposed in any context with the BMW mark he assumes that it refers to an authorised dealer.  The issue was whether that impression was conveyed by the sign Technosport BMW, or that there was a risk that it would be. Evidence of actual consumers was not necessary: "Evidence of actual confusion is never a pre-requisite in an infringement or passing off action".

 

According to Floyd LJ, had the IPEC Judge considered the context in which the “Technosport BMW” signs were being used, then he would have inevitably come to the conclusion that that the use of the Technosport BMW signs was more than informative use and carried the risk that it would be understood as misleading use.   Accordingly, the pleaded instances of use of the “Technosport BMW” signs in this case infringed the BMW word mark and constituted passing off.

This decision confirms that the use of a brand name to indicate the services provided by a business does not extend to the use of a brand in a trading name.  The Court of Appeal has clarified that such a mark can be used by third parties on an informative basis, but it is important to bear in mind that, when used in combination with a third party sign “without more”, the use is not informative enough. Additional and clear wording is required in order to avoid the risk that the consumer will not be misled, although as BMW conceded, "specialist" appears to be sufficient.

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Talking about consent in relation to online IP infringements, the High Court recently considered Google keyword advertising hosted on third parties’ websites since Interflora v Marks & Spencer, and provided detailed guidance on issues of internet jurisdiction in trade mark cases (in Argos Ltd v Argos Systems Inc [2017] EWHC 231).

 

The British retailer Argos Ltd (“Argos UK”) brought a High Court claim against a an American software company,  Argos Systems Inc., for infringement of its trade marks and passing off in relation to use of the ARGOS name on Argos Systems Inc. in its domain name www.argos.com.  In particular, Argos UK (which holds two EU trade mark registrations for the word mark ARGOS for, inter alia, retail and related services in Class 35) complained of Argos Systems Inc. 's use of the Google AdSense programme on its website.   Argos UK also participated in Google advertising programmes and its own ads were among those that appeared on Argos Systems Inc.’s  website.

 

The High Court dismissed Argos UK's infringement claim for the following reasons:

 

  1. By agreeing to the Google AdSense terms of use, Argos UK consented to use of the sign ARGOS by Argos Systems Inc. in the domain name
  2. The website www.argos.com was not targeted at consumers in the UK, so Argos Systems Inc did not use the sign ARGOS within the UK.
  3. Argos Systems Inc. was not using the sign ARGOS in relation to goods or services that were identical to those for which Argos UK’s marks were registered .
  4. Use of the sign ARGOS by Argos Systems Inc. did not adversely affect any of the functions of Argos UK’s trade marks.
  5. No case of link, detriment, or unfair advantage could be established.
  6. The use of ARGOS was with due cause, since www.argos.com had functioned as Argos Systems Inc.’s badge of origin in cyberspace at all times since January 1992.
  7. Argos Systems Inc. could rely upon the own name defence.
  8. Argos UK had failed to establish a material misrepresentation to the public and therefore there was no passing off.
  9. The domain name www.argos.com was not an instrument of fraud.

On the issue of consent, this decision illustrates the need to always to be aware of the far reaching consequences of accepting online terms and conditions.  In the present case, it was the consent given by Argos UK Ltd via the acceptance of those terms and conditions which proved fatal to its claim. 

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In Caspian Pizza Ltd & Ors v Shah & Anor [2017] EWCA Civ 1874, the claimants were unable to prevent the defendants from keeping a slice of the pizza pie action. The claimants were proprietors of a pizza restaurant chain in Birmingham, first set up in 1991 under the name CASPIAN.  They obtained UK registrations for a word mark CASPIAN covering restaurant services, and a CASPIAN PIZZA device mark covering pizza toppings:

 

The defendants opened their first CASPIAN pizza restaurant in Worcester in 2002; this closed in 2005. They opened a second CASPAIN restaurant in 2004 (with subsequent ones following in the same area).

 

At first instance, the CASPAIN word mark was found invalid because the defendants had acquired sufficient goodwill in Worcester at the filing date to allow a passing off action.  The defendants did not have any rights in the logo version, and so did not successfully invalidate this right at first instance. The claimants appealed the declaration of invalidity in respect of the word mark. They asked that their registration be amended to exclude Worcester, but the Court of Appeal indicated it was too late to request such a limitation: this should have been done during the application process. A cross-appeal by the defendants requesting invalidity of the logo mark was allowed, as due to the inclusion of the word CASPIAN, the court found no reason to distinguish this mark from the word mark.

 

This decision shows that prior local goodwill can serve as a defence, for the purposes of s 11(3), to trade mark infringement.  Secondly, prior local goodwill, which is sufficient to bring a claim in passing off, can successfully attack the registration of a trade mark either during registration itself or sometime after registration.  Accordingly, trade mark applicants must do their due diligence: searching the trade mark register for existing conflicting registrations is the usual and obvious first step, but it is important that applicants also consider businesses who might not own a trade mark but nevertheless have goodwill, particularly local goodwill.

C
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