Welcome to Issue No 6 June 2024
There have been several important decisions on trade marks since the last issue:
In Lifestyle Equities the Supreme Court considered the liability of company directors for the torts of their companies. ? The justices held that the directors were not primarily liable for trade mark infringement as they had done none of the acts prohibited by s.10 of the Trade Marks Act 1994. ? The Court considered whether they might be liable as accessories but decided that they were not because they lacked the necessary knowledge and intent. As they were not liable as infringers or accessories they could not be ordered to account to the claimants.? Even if they had been liable, they could have been ordered to account only for the profits that they had received and not for those that had accrued to their company.? I discussed this appeal in Trade Marks: Lifestyle Equities v Ahmed on 2 June 2024 in NIPC Law and in Another Beverly Hills Polo Club Appeal on 4 June 2024 in NIPC Branding.
The case before Mrs Justice Bacon was an action for trade mark infringement by easyGroup Ltd. against online retailers of cosmetics, perfumes, toiletries and related products that had traded “easyCOSMETIC” in Austria and Germany. There was also a counterclaim by the defendants for the partial revocation of one of the claimant's marks. The issues that her ladyship had to decide included the merits of the counterclaim, the identity of the average consumer and whether the defendants were liable under art 9 (2) (b) or (c) of Regulation 2017/1001. The case was launched just before EU law had ceased to apply to the UK and is likely to have been one of the last in which an English court has sat as an EU trade mark court. I discussed this action in Trade Marks - easyGroup Ltd. v Beauty Perfectionists Ltd. and Others on 30 June 2024 in NIPC Law.
One of the first cases to consider accessory liability following the Supreme Court’s judgment in Lifestyle Equities CV and another v Ahmed and Another was Morley's (Fast Foods) Ltd v Sivakumar and others. ? This was an action for trade mark infringement and passing off that had been brought by the franchisor of the Morley’s fast-food chain against the franchisor and franchisees of a competing chain called Metro’s.? Judge Melissa Clarke found that the conditions for accessory liability had been satisfied. ? She had many other issues to decide most of which she determined in favour of the claimant.? I wrote about the case in Trade Marks - Morley's (Fast Foods) Ltd. v Nanthakumar and others on 18 June 2024 in NIPC Law.
The inventor of the Bitcoin cryptocurrency and author of Bitcoin: A Peer-to-Peer Electronic Cash System is said to be one Satoshi Nakamoto.? Nobody knows Nakamoto’s identity,? whether he or she is a man or a woman, an individual or a team.? Recently an Australian computer scientist called? Craig Steven Wright claimed to be Nakamoto and threatened litigation against those who challenged his claim.? The validity of Dr Wright’s claim was an issue in various passing off and copyright and database right infringement proceedings.? A group of developers known as the Crypto Open Patent Alliance (“COPA”) brought proceedings against Dr Wright for declarations that he was not Nakamoto or the author of documents and code attributed to Nakamoto. ? After a 23-day trial between 5 Feb and 14 March 2024, Mr Justice Mellor announced that Dr Wright was not Mr Nakamoto.? He set out his findings in a 945-paragraph judgment with a 799-paragraph annexe. A transcript of the judgment is to be found at Crypto Open Patent Alliance v Wright [2024] EWHC 1198 (Ch) (20 May 2024) and I discussed it in Bitcoin - COPA v Wright on 11 June 2024.
In Service of Process in Germany After Brexit - Seraphine Ltd v Mamarella GmbH I considered some of the complexities, difficulties and uncertainties of serving process in Germany since the UK’s departure from the EU that had arisen in ?Seraphine Ltd v Mamarella GmbH [2024] EWHC 425 (IPEC) (1 March 2024). In Seraphine Ltd v Mamarella GmbH [2024] EWHC 1507 (IPEC) of 18 June 2024 the defendant sought unsuccessfully a stay of proceedings in England to await the outcome of proceedings in Germany that included some of the same issues.? I wrote about that decision in Seraphine Ltd v Mamarella GmbH - The Sequel in IP After Brexit on 21 June 2024.
AgriTech is an increasingly important sector as the world adapts to climate change. An important development is the collaboration between Aberinnovation and the Menai Science Park (“M-SParc”) in agricultural technology.? Aberinnovation is literally next door to? IBERS, the Institute of Biological, Environmental and Rural Sciences of Aberystwyth University,? a leading institution in developing new varieties of plants and seeds. M-SParc is an enterprise of Bangor University whose Centre for Applied Marine Sciences is a leading research institution in aquaculture. The collaboration between the two science parks was launched with a webinar on 14 June 2024 which I discussed in The Welsh Science Parks' AgriTech Cluster on 19 June 2024 in NIPC Wales.
Space Hub Yorkshire has just published its first newsletter promoting its two-day Ignite Space conference at the Royal Armouries on 11 and 12 June 2024.? I mentioned those activities in Space Hub Yorkshire in NIPC IP Yorkshire on 13 June 2024.
Accessory Liability
In Lifestyle Equities CV and another v Ahmed and Another [2024] UKSC 17 the Supreme Court explained that there was a common law principle of accessory liability which operates alongside obligations imposed by statute.? It arises:
(1) where the accessory procures a primary wrongdoer to commit a tort or breach of contract; or
(2) where the accessory joins the primary wrongdoer in a common scheme to commit a tort.
In either case, the accessory is liable only where he or she possesses the necessary knowledge and intent to commit the tort.???
Lifestyle Equities case was not one of counterfeiting. ? There were sufficient differences between the claimants’ trade marks and the signs used by the defendant companies for there to be argument and honest difference of opinion about the extent of the similarity and whether it gave rise to a likelihood of confusion or otherwise resulted in infringement.? The trial judge had made findings of the defendant directors’ knowledge that fell well short of that required for accessory liability. ? It had been wrong to hold the directors jointly liable for the companies’ infringements of the claimants’ trade marks.? Although the directors procured acts attributable to the company that amounted to infringements, neither of them was found to have had the knowledge or intent required to make them jointly liable for the infringements on either principle of accessory liability. ? For further information see? Trade Marks: Lifestyle Equities v Ahmed on 2 June 2024 in NIPC Law and in Another Beverly Hills Polo Club Appeal on 4 June 2024 in NIPC Branding.
One of the issues that Judge Melissa Clarke had to decide in Morley's (Fast Foods) Ltd v Sivakumar and others [2024] EWHC 1369 (IPEC) was whether Kunalingam Kunatheeswaran, the franchisor of the Metro’s chain of fast food outlets, was jointly and severally liable with his franchisees or any of them in respect of any liability for trade mark infringement established against any of them?? According to para [137] of her judgment the judge referred to the Supreme Court's judgment in Fish & Fish Ltd v Sea Shepherd UK [2015] AC 1229 but not to its very recent decision in Lifestyle Equities v Ahmed [2024] UKSC 17.? The defendants drew Lifestyle Equities to the judge’s attention and invited her to reconsider her judgment in view of that decision. Her Honour revisited the issue and directed herself that the Supreme Court had “clarified that in order for persons to be held jointly liable with a tortfeasor for a tort, they must have knowledge of the essential facts which make the acts wrongful, whether or not the primary tort in question (such as trade mark infringement as it was in that case) is a strict liability offence and whether or not the accessory liability arises from procuring a tort or by a common design.”? She said that she had already found that Mr Kunatheeswaran was liable as a primary infringer in that he had used one of the infringing signs.? Moreover, his franchise agreement required the franchisees to use the prohibited sign.
She was therefore satisfied that Mr Kunatheeswaran had reasonable grounds for knowing, and should have known, that the sign infringed the claimant's mark. ? By his franchise agreements, he had knowingly authorized and procured the infringements complained of.? Accordingly, he was jointly liable, with his franchisees for those infringements. ? I discussed the issue in greater detail in Trade Marks - Morley's (Fast Foods) Ltd. v Nanthakumar and others on 18 June 2024 in NIPC Law.
Accounts of Profit
Actions in the Chancery Division usually proceed in two stages.? First, there is a trial to determine whether the defendant is liable to the claimant. ? If he or she is liable there is a further proceeding known as an “inquiry as to damages” to decide how much damages should be paid to the claimant by way of compensation for his injury, loss or damage.? Alternatively, if the defendant has profited from his or her wrongdoing the court may determine his or her profits in a hearing called an “account of profits”.? A successful claimant can apply for either remedy but not both. ? He or she can compel the defendant to provide information about the defendant’s business so that the claimant can make an informed choice.
In? Lifestyle Equities CV and another v Santa Monica Polo Club Ltd and others [2017] EWHC 3313 (Ch) (21 Dec 2017) Mr Recorder Campbell QC held that a corporate defendant and two of its directors were jointly liable for trade mark infringement.? Even though the company had been placed in administration and was subsequently dissolved the claimants chose an account of profits.? They did so in the belief that the court would order the directors to account for the profits of the company,
The recorder assessed the accountable profits of the company at ￡3,129,921 but rejected the claimants’ contention that the directors were liable to account for that sum in Lifestyle Equities CV and Another v Santa Monica Polo Club Ltd and others [2020] EWHC 688 (Ch) (23 March 2020)? Instead, he held that the directors should account only for the proportion of their salaries that had resulted from the infringement. In the case of one of the directors,? that was ￡144,192. ? In the case of the other, it was ￡57,007.? The recorder also ordered one of the directors to account for a ￡635,789 loan that he had received from the company.
Both sides appealed to the Court of Appeal.? In Lifestyle Equities C.V. and Another v Ahmed and Another [2021] EWCA Civ 675 (7 May 2021) the Lord Justices upheld the recorder's decision that the directors should account to the claimants only for the profits that they had received and not for the profits of the company.? They relieved the director who had been ordered to account for a loan from that liability.? They also allowed the directors to deduct income tax from the amounts payable to the claimants.????
In Lifestyle Equities CV and Another v Ahmed and Another [2024] UKSC 17 the Supreme Court allowed the directors’ appeal against liability either as infringers or accessories.? No longer were they required to account to the claimants.? However, as they had been fully argued, their lordships determined the following issues:
"(i) Was it appropriate to order an account of profits when there was no finding that the [directors] had acted unconscionably or in bad faith?
(ii) If so, should the [directors] have been ordered to account for profits made by their company (as Lifestyle contends)?
(iii) If not but the judge was in principle correct to order the [directors] to account for profits which they had themselves made from the infringements, was he right to regard (a) the loan made by [the company] to [one of the directors] and (b) a proportion of the [directors'] salaries as such profits?
(iv) If it was in principle right to treat a proportion of the [directors’] salaries as profits, was the Court of Appeal entitled and correct to hold that in calculating those profits deductions should be made for income tax?"
The answer to Issue (i) was that if knowledge of impropriety was required for accessory liability, then the possibility of ordering an innocent accessory to account for profits would simply not arise.
As for Issue (ii), the Supreme Court agreed with the Court of Appeal that it followed from the very nature of the remedy that the only profits for which a person should be ordered to account were profits that he or she had made and not those made by anybody else. A person ordered to account for someone else's profits would not be giving up a gain but paying a penalty or fine which would be tantamount to an award of punitive damages.?
Lord Justice Lewison explained the purpose of an account of profits in OOO Abbott and Another v Design & Display Ltd and Another [2016] EWCA Civ 95:
“An account of profits is confined to profits actually made, its purpose being not to punish the defendant but to prevent his unjust enrichment. The underlying theory is that the infringer is treated as having carried on his business (to the extent that it infringes) on behalf of the patentee. The broad principle is that the patentee is entitled to profits that have been earned by the use of his invention. If the patentee does not recover those profits, the infringer will have been unjustly enriched. So the purpose of the account is to quantify the extent to which the infringer would be unjustly enriched if he were to retain the profits derived by him from the infringement.”
I discussed that topic in Account of Profits - OOO Abbott and Another v Design & Display Ltd and Another on 7 March 2016 in NIPC Law.
On Issue (iii) the Supreme Court agreed with the Court of Appeal that it had been wrong in principle to treat the loan as a profit. A person does not make a profit by borrowing money. It might have been different had the loan been interest-free or at a discount but that had not been alleged.? The Court of Appeal and recorder had erred by treating part of the directors' salaries as accountable profits. There was no evidence that their remuneration was attributable to the company's trade mark infringements rather than their normal payments for services rendered.?
With regard to issue (iv), it was not fruitful to consider whether income tax should or should not be taken into account in calculating profits when the sums upon which income tax was paid were not profits.
See? Trade Marks: Lifestyle Equities v Ahmed 2 June 2024 NIPC Law and Another Beverly Hills Polo Club Appeal 4 June 2024 NIPC Branding.
Bitcoin
Bitcoin was the world's first cryptocurrency, a digital currency that does not depend on a government, bank or other central institution to function. It is said to have been created by one Satoshi Nakamoto. Nobody knows the identity of that person or even whether that person is a single individual or a team. An Australian computer scientist called Craig Steven Wright ("Dr Wright") claims to be Satoshi Nakamoto but his claim has been disputed by an organization called the Crypto Open Patents Alliance ("COPA"). By an action instituted on 9 April 2023, COPA alleged that Dr Wright was not Sakamoto.
The action turned on the facts.? ? Dr Wright’s case was summarized in the paragraph of Mr Justice Meller’s judgment:
"[1] .................. Dr Wright also claims to be a person with a unique intellect, with numerous degrees and PhDs in a wide range of subjects, the unique combination of which led him (so it is said) to devise the Bitcoin system.”
The judge listed the factors supporting Dr Wright’s claim to be Satoshi Nakamoto at para 11 of his judgment:
"11.1. His unique combination of skills, knowledge, qualifications and interests in various concepts which combined to result in the creation of Bitcoin.
11.2. The evidence from his business associates and family which is consistent with his claim (albeit largely circumstantial).
11.3. The evidence from the 'proof' sessions in 2016.
11.4. The very substantial body of evidence comprised in Dr Wright's own witness statements.
11.5. The content of his Reliance Documents which he emphasised was more significant than their metadata."
The “Reliance Documents” are documents on which Dr Wright relied in support of his claim.
In para [13]? the judge set out the reasons why he doubted that Dr Wright was Satoshi Nakamoto:
"13.1. First, the attributes and behaviour which one would expect Satoshi to exhibit and prove (on the assumption that he would set out to prove he was Satoshi - on which see below), and those he would not. ………..
13.2. Second and by contrast, the attributes and behaviours which Dr Wright has exhibited and which were proved to my satisfaction in this Trial:
…………..
13.2.4. The picture painted by Dr Wright in his evidence was, in essence, that he was solely responsible for creating Bitcoin, that he was much cleverer than anyone else, that anyone who questioned his claim or his evidence was not qualified to do so or just didn't understand what he was saying. In my judgment, the arrogance he displayed was at odds with what comes through from Satoshi's writing. In short, in his writing and attitude Dr Wright just doesn't sound or act like Satoshi."
The judge added at para [14]:
“Ultimately, I consider it is likely that the real Satoshi would never have set out to prove in litigation that he actually was Satoshi and certainly not in the way that Dr Wright attempted to do so."
The judgment is concerned mainly with issues of fact.? The only legal issues were procedural. ? For most of his judgment, Mr Justice Mellor considered assertions made by Dr Wright in his first witness statement and compared them with the countervailing evidence. ? Those assertions covered
Many of Dr Wright's assertions were inconsistent with the judge's findings on the authorship of the Bitcoin White Paper. ? Several of the documents upon which Dr Wright relied were found to be forgeries.? COPA questioned his coding expertise in C++.? He was unable to explain coding anomalies and anachronisms that an author could be expected to? justify,???
His lordship concluded at para [928]:??
"Having (a) reached conclusions on COPA's allegations of forgery, (b) accepted the remaining allegations of inauthenticity which, as far as I am aware, cover Dr Wright's Reliance Documents, (c) not had my attention drawn to any other documents which appear to support Dr Wright's claim and which can be considered reliable, (d) considered the largely circumstantial evidence from the witnesses of fact called to support Dr Wright's case, (e) considered the evidence given in Dr Wright's own witness statements and (f) considered all the evidence adduced by COPA and the Developers, the case that Dr Wright is not Satoshi Nakamoto is overwhelming."
Mr Justice Mellor indicated that he was minded to make the following declaration:
"First, that Dr Wright is not the author of the Bitcoin White Paper.
Second, Dr Wright is not the person who adopted or operated under the pseudonym Satoshi Nakamoto in the period between 2008 and 2011.
Third, Dr Wright is not the person who created the Bitcoin system.
Fourth, Dr Wright is not the author of the initial versions of the Bitcoin Software."
The judge has deferred granting injunctive relief until a consequential hearing,
For further information, see Bitcoin - COPA v Wright? 11 June 2024.
Brexit
EU Trade Marks
easyGroup Ltd v Beauty Perfectionists Ltd and Others [2024] EWHC 1441 (Ch) (13 June 2024);
Art 123 (1) of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (codification)(Text with EEA relevance) OJ L 154, 16.6.2017, p. 1–99 require EU member states to designate in their territories as limited a number as possible of national courts and tribunals of first and second instance to perform the functions assigned to them by that regulation.? Those courts and tribunals are known as “EU Trade Mark courts”.? Art 124 confers exclusive jurisdiction on those courts for all infringement actions under art 124 (a) and counterclaims for revocation under art 124 (d).? When the UK was a member state the Senior Courts of England and Wales were designated as EU Trade Mark courts.
Although the UK left the EU on 31 Jan? 2020, EU law continued to apply to its territories until 23:00 on 31 Dec 2020 by virtue of art 127 (1) of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community.? Those 11 months were known as the “transition” or “implementation period”.? During that period EU trade marks remained in force in the UK.
easyGroup Ltd held EU trade marks for the word EASYJET which the company registered as EU trade marks under trade mark numbers EU10584001 and EU1232909. Beauty Perfectionists Ltd ?and Beauty International Austria Ltd distributed cosmetics, perfumes, toiletries and related products online in Germany and Austria under the following signs:
Believing that Beauty Perfectionists Ltd and Beauty International Austria Ltd had infringed its EU trade marks, easyJet issued proceedings in the Chancery Division for infringement of those marks on 5 March 2020.
The action came on before Mrs Justice Bacon who acknowledged at para [2] of her judgment in easyGroup Ltd v Beauty Perfectionists Ltd and Others [2024] EWHC 1441 (Ch) (13 June 2024) that she was sitting as an EU Trade Mark court and was bound by EU law,? This is likely to have been one of the last occasions that an English court has sat as an EU Trade Mark Court.? ? I discussed this aspect of the case further in Trade Marks - easyGroup Ltd. v Beauty Perfectionists Ltd. and Others on 30 June 2024 in NIPC Law.
Lis Pendens
Seraphine Ltd v Mamarella GmbH [2024] EWHC 1507 (IPEC) (18 June 2024)
When the UK was a member of the European Union, litigation between parties in the UK and other member states was governed by Regulation (EC) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast).? The regulation determined the forum in which disputes would be resolved and provided a procedure for the service of process.? Decisions of English courts could be enforced easily anywhere in the European Union which enhanced London’s attractiveness as a forum for the resolution of civil and commercial disputes. ? As I noted in Trans-Border Litigation after Brexit on 1 Nov 2018 the legal sector generated ￡3.3 billion of revenue in 2015.
?When the UK left the European Union HM government applied to rejoin the Lugano Convention (Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters OJ L 339, 21.12.2007, p. 3–41) which was similar to Regulation 1215/2012 and provided many of its advantages.? As I mentioned in EU Commission rejects the UK's Application to rejoin Lugano on 4 May 2021, the Commission advised the governments of the member states to reject the British application.?
This has already brought inconvenient consequences for British intellectual property rights owners.? In Service of Process in Germany After Brexit - Seraphine Ltd v Mamarella GmbH I discussed the complexities, difficulties and uncertainties of serving process in an unregistered Community design infringement case in Germany that had arisen in? Seraphine Ltd v Mamarella GmbH [2024] EWHC 425 (IPEC) (1 March 2024).
In Seraphine Ltd v Mamarella GmbH [2024] EWHC 1507 (IPEC) (18 June 2024) the boot was on the other foot.? The defendant applied for a stay to abide the outcome of litigation in Germany between the same parties and involving some of the same designs.? The defendant argued that a decision in the German proceedings would give rise to a res judicata though that argument was contested by the claimant.
Art 29 (1) of Regulation 1215/2012 provided that where proceedings involving the same cause of action and between the same parties were brought in the courts of different Member States, any court other than the court first seised was obliged of its own motion to stay its proceedings until such time as the jurisdiction of the court first seised could be established. ? In Seraphine, the defendant argued unsuccessfully for a stay of the English proceedings to avoid duplication of effort and save costs.
I discussed Mamarella GmbH’s application in Seraphine Ltd v Mamarella GmbH - The Sequel in IP After Brexit on 21 June 2024.
Plant Breeders’ Rights
In The Welsh Science Parks' Agri-Tech Cluster I observed that the development of heat, flood, drought or pest-resistant crops and other food sources has never been more important than now.? That is because much of the world’s food production has been affected by climate change.? Considerable investment will be required for the development of those new crops which will need to be protected.
As I also pointed out in my article,? the rights of breeders of new plant varieties are protected in this country by the Plant Varieties Act 1997. ? S.1 (1) of that Act states that those rights are known as “plant breeders’ rights”.? S.1 (2) provides that plant breeders’ rights may subsist in varieties of all plant genera and species. ? Plant breeders rights are granted by the Controller of Plant Variety Rights if satisfied that the variety is distinct, uniform, stable and new.? S. 6 (1) of the Act entitles the rights holder to prevent anyone from doing any of the following acts as respects the propagating material of the protected variety without his or her authority, namely—
(a) production or reproduction (multiplication),
(b) conditioning for the purpose of propagation,
(c) offering for sale,
(d) selling or other marketing,
(e) exporting,
(f) importing,
(g) stocking for any of the purposes mentioned in paragraphs (a) to (f) above, and
(h) any other act prescribed for the purposes of that provision.
CPR 63.2 (1)(b)(iii) and 63.2 (2) require proceedings for infringement of those rights to be brought in the Patents Court or the Intellectual? Property Enterprise Court.
I stated in my article that plant breeders' rights have long been regarded as a Cinderella area of intellectual property law in this country, unlike countries such as Australia with large viticulture industries.? However, agricultural technology is increasing in importance for the reasons that I mentioned above.? Its importance is likely to be enhanced by such initiatives as the collaboration between Aberinnovation and M-SParc and UKRI’s Mid and North Wales Launchpad.
I have written several articles on plant breeders’ rights over the years which can be accessed through my Plant Breeders Rights web page.?
Space
My article on the Yorkshire Space Hub is the latest in a series of articles on that increasingly important economic sector. ? The others appear as follows:
Trade Marks
Average Consumer
The identification of the average consumer was an issue in both easyGroup Ltd v Beauty Perfectionists Ltd and others [2024] EWHC 1441 (Ch) and? Morley's (Fast Foods) Ltd v Sivakumar and others [2024] EWHC 1369 (IPEC).? Judge Melissa Clarke pointed to the importance of the issue by quoting para [15] of Lord Justice Arnold’s judgment in Lidl Great Britain Limited v Tesco Stores Limited [2024] EWCA Civ 262 that:
"It is firmly established that many issues in trade mark law, including the issues arising on claims for infringement, must be assessed from the perspective of the "average consumer" of the relevant goods and/or services, who is "deemed to be reasonably well informed and reasonably observant and circumspect": see Case C-342/97 Lloyd Schuhfabrik Meyer & Co. GmbH v Klijsen Handel BV [1999] ECR I-3819 at [26] and many subsequent authorities."
In identifying the average consumer she followed Lord Justice Arnold’s guidance in Lidl:
"[16] First, the average consumer is both a legal construct and a normative benchmark. They are a legal construct in that consumers who are ill-informed or careless and consumers with specialised knowledge or who are excessively careful are excluded from consideration. They are a normative benchmark in that they provide a standard which enables the courts to strike a balance between the various competing interests involved, including the interests of trade mark owners, their competitors and consumers.
[17] Secondly, the average consumer is neither a single hypothetical person nor some form of mathematical average, nor does assessment from the perspective of the average consumer involve a statistical test. They represent consumers who have a spectrum of attributes such as age, gender, ethnicity and social group. For this reason the European case law frequently refers to "the relevant public" and "average consumers" rather than, or interchangeably with, "the average consumer": see, for example, Case C-252/07 Intel Corporation Inc v CPM United Kingdom Ltd [2008] ECR I-8823 at [34]. It follows that assessment from the perspective of the average consumer does not involve the imposition of a single meaning rule akin to that applied in defamation law (but not malicious falsehood). Thus, when considering the issue of likelihood of confusion, a conclusion of infringement is not precluded by a finding that many consumers of whom the average consumer is representative would not be confused. To the contrary, if, having regard to the perceptions and expectations of the average consumer, the court considers that a significant proportion of the relevant public is likely to be confused, then a finding of infringement may properly be made.
[18] Thirdly, assessment from the perspective of the average consumer is designed to facilitate adjudication of trade mark disputes by providing an objective criterion, by promoting consistency of assessment and by enabling courts and tribunals to determine such issues so far as possible without the need for evidence. I shall return to the last of these considerations below.
[19] Fourthly, the average consumer's level of attention varies according to the category of goods or services in question.
[20] Fifthly, the average consumer rarely has the opportunity to make direct comparisons between trade marks (or between trade marks and signs) and must instead rely upon the imperfect picture of the trade mark they have kept in their mind."
The evidence before Judge Melissa Clarke had been that the claimant's customers tended to be aged between 13 and 32 with low disposable incomes.? They included schoolchildren and students but also young families.? Demand tended to spike at meal times but there was also a late-night surge in demand from customers who had been drinking.? She found that there had been two classes of average consumers:
Her Honour noted at [81] that it was enough for one of those classes of average consumers to be confused for there to be a likelihood of confusion in relation to that class.
Referring to para [275] of Mr Justice Arnold's judgment in Sky v Skykick UK [2018] EWHC 155) Mrs Justice Bacon directed herself that the "average consumer" must be a consumer of the relevant goods or services who is both?
(i) familiar with the trade mark and?
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(ii) exposed to, and likely to rely upon, the sign.
Citing Chief Insolvency Judge Briggs's judgment in easyGroup Ltd v Easylife Ltd and another (Rev2) [2021] EWHC 2150 (Ch) (29 July 2021) she observed that the average consumer must be a consumer of the goods or services in relation to which the signs complained of had been used, ? The parties agreed that these would be consumers of beauty and skincare products in Austria, Germany and the UK.
Family of Marks
Mrs Justice Bacon explained the importance of finding a family of marks of para [82] of her judgment in easyGroup.? Where a claimant has a number of trade marks with a common feature, and the accused sign uses that common feature, there may be a greater likelihood of confusion for the purposes of a claim under art? 9 (2) (b) of Regulation 2017/1001 or s.10 (2) of the Trade Marks Act 1994, or of a link between the sign and the trade mark for the purposes of a claim under art 9 (2) (c) of the Regulation and s.10 (3) of the Act.
Judge Melissa Clarke referred to para [234] of Mr Justice Arnold’s judgment in? W3 Ltd v easyGroup Ltd [2018] EWHC 7 (Ch) ?that where it is shown that the trade mark proprietor has used a "family" of trade marks with a common feature, and a third party uses a sign which shares that common feature, such use can support the existence of a likelihood of confusion.
In easyGroup Mrs Justice Bacon rejected the contention that the use of a mark comprising "easy" before words alluding to goods or services was a reference to goods or services associated with, approved, authorized or endorsed by easyGroup. "Easy" was a commonplace adjective and there are many companies in the UK which use "easy" in their branding but are unconnected with easyGroup,? These include several in which the courts had found there to be no infringement such as EasyRoommate, easylife, Easy Live Auction and EasyOffices.
However, easyGroup required its licensees to adopt the same colouring and stylization and it was relevant to take account of the association of the easy family marks with orange colouring when considering infringement.
In Morley's (Fast Foods) Ltd? the claimant held the following marks:
It argued that there was a family of marks for the following reasons:
"i) There is a common element in the word "Morley's" in respect of the Morley's Mark and the Morley's Red and White Mark;
ii) The Morley's Mark is nearly identically incorporated into the Morley's Red and White Mark, save for a colour difference and subtle differences in the fonts such that it is nearly subsumed in the Morley's Red and White Mark;
iii) The distinctive form of the letter "M" in the word "Morley's" is present in both the Morley's Mark and the Morley's Red and White Mark ;
iv) The triple "M" in the Morley's Red and White Mark is identical in concept to the Triple M Mark and could be said in the same way which would make them orally and conceptually identical;
v) The "M" in the Triple M Mark makes reference to the distinctive "M" in the Morley's Mark and the Morley's Red and White Mark;
vi) C's Marks have been used across all Morley's restaurant franchises in a variety of manners, including but not limited to signage, menu cards and boards, marketing and promotional material;
vii) The same logos, marks and branding have been used, together, in the Morley's fast food business, since 1985. SS's evidence is that they "were, and still are, synonymous with each other."
The judge disagreed. ? She said at para [89]:
"In my judgment the "MMM..." in the Morley's Red and White Mark, found as it is in the context of a sentence forming the strapline, is likely to be seen, pronounced and conceptually understood by the average consumer as one long "mmm" sound, i.e. as the familiar expression of pleasure in something tasty. "Triple M" is a somewhat oblique reference to the "MMM..." in the strapline of the Morley's Red and White Mark, which I am satisfied many consumers would miss. They might think the "M" relates to Morley's and this is a triple burger, for example, or simply not think about the reason it was chosen. I am also satisfied that few if any consumers would look at the words "Triple M" and read, pronounce or understand it as "mmm". Similarly I am satisfied that few if any consumers would look at the strapline "MMM... It Tastes Better" and read or pronounce that as "Triple M... It Tastes Better". That seems to me to be extremely unlikely (but note that I have a different view when "MMM" is used in a different context, see the discussion in relation to Issue 7 below). I do not consider those visually and aurally different, and conceptually only obliquely similar, elements are a "common element" sufficient to found a family of marks."
Likelihood of Confusion
S.10 (2) (b) of the Trade Marks Act 1994 provides: “A person infringes a registered trade mark if he uses in the course of trade a sign where because—
……………
(b)? ? the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered,
there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark.”
Art 9 (2) (b) of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (codification)(Text with EEA relevance.)OJ L 154, 16.6.2017, p. 1–99 (“the EU Trade Mark Regulation”) is in almost identical terms:
"Without prejudice to the rights of proprietors acquired before the filing date or the priority date of the EU trade mark, the proprietor of the EU trade mark shall be entitled to prevent all third parties not having his consent from using in the course of trade, in relation to goods or services, any sign where:
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(b) the sign is identical with, or similar to, the EU trade mark and is used in relation to goods or services which are identical with, or similar to, the goods or services for which the EU trade mark is registered, if there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark....."
Her Honour Judge Melissa Clarke held that the following mark infringed the trade marks identified above under s.10 (2) (b) of the Act:
Mrs Justice Bacon held that the defendants’ signs did not infringe the claimant’s marks:
The claimant’s registered marks were:
Mrs Justice Bacon’s starting point was para [7] of Lord Justice Arnold's judgment in Liverpool Gin Distillery v Sazerac [2021] EWCA Civ 1207 where he said that in order to establish infringement under art 9 (2) (b), six conditions must be satisfied:?
(i) there must be use of a sign by a third party within the relevant territory;?
(ii) the use must be in the course of trade;?
(iii) it must be without the consent of the proprietor of the trade mark;?
(iv) it must be of a sign which is at least similar to the trade mark;?
(v) it must be in relation to goods or services which are at least similar to those for which the trade mark is registered; and?
(vi) it must give rise to a likelihood of confusion on the part of the public.
Judge Melissa Clarke’s starting point was Lord Justice Kitchin’s judgement in Comic Enterprises Ltd v Twentieth Century Fox Film Corporation [2016] EWCA Civ 41 where he said that a proprietor of a trade mark alleging infringement under art 5 (1) (b) of the Trade Marks Directive from which s.10 (2) was derived must satisfy the above 6 conditions.
In determining likelihood of confusion, both judges referred to the following guidelines in Iconix Luxembourg Holdings SARL v Dream Pairs Europe Inc & Another ?[2024] EWCA Civ 29 (26 Jan 2024) at para [10]:
"(a) the likelihood of confusion must be appreciated globally, taking account of all relevant factors;
(b) the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question;
(c) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;
(d) the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements;
(e) nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components;
(f) and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark;
(g) a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa;
(h) there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;
(i) mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient;
(j) the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense; and
(k) if the association between the marks creates a risk that the public might believe that the respective goods or services come from the same or economically-linked undertakings, there is a likelihood of confusion."
Judge Melissa Clarke’s analysis was as follows: "The combination of the following factors:
i) that a class of the average consumer is made up of late-night revellers a subset of whom are intoxicated and who pay a low degree of attention to their choice of fast-food shop;
ii) that I have found that Sign 1 is similar to the Morley's Red and White Mark to a medium degree;
iii) that the Morley's Red and White Mark has a higher level of distinctiveness giving rise to an increased risk of confusion;
iv) that part of the context of the use of Sign 1 is that it is used in and on Metro's shops with a very similar get-up to that of Morley's stores, some of which (the large wall posters of a woman eating a burger, the brick walls, the red and white interior tiles) is visible from the street outside the stores through the shop windows;
v) that I accept SS's evidence that the similarity between Sign 1 and the Morley's Red and White Mark is more marked when Sign 1 is viewed on a lit-up fascia at night, such that it has confused even him into mistaking a Metro's shop for one of his own;
means that I am satisfied that there is a likelihood of confusion by a substantial part of that class of average consumer. That is sufficient."
Mrs Justice Bacon compared the services for which the claimant’s marks had been registered with the defendants’: "From the date of revocation (10 January 2020) the comparison is between in-flight retail of cosmetics and fragrances under the 001 mark, and the defendants' online retail of cosmetics and fragrances through their German and Austrian websites. Those services are similar but only to a moderate degree, given the very different nature of the retail channels used in each case. As the defendants rightly point out, in-flight retail services are perceived as ancillary to the core transport services provided by the relevant airline, and the average consumer would not expect to see airlines engaging in the online retail of goods outside the context of the flight." ? As I mention below, the judge had partially revoked? the registration of EU10584001 in relation to the services in class 35 pursuant to art 58 (2) of the EI Trade Mark Regulation except in so far as those services were provided to passengers on an aeroplane, described as "in-flight retail".
Her ladyship then compared the signs and marks: “Likelihood of confusion overall. The matters set out above disclose factors that point in both directions. The ‘easy’ element of the 001 mark (which easyGroup contends is the dominant component of that mark) has no inherent distinctive character, and the family reputation is not relevant for German/Austrian consumers. For UK consumers the family reputation is relevant, although none of the easy family brands are related to the retail of consumer goods such as cosmetics and fragrances. There is some visual and conceptual similarity between the 001 mark and the easyCOSMETIC signs, and the font style of the figurative signs and the orange colouring in the orange/black sign bears some similarity to the stylisation of the easy family of marks, and the colouring associated with the 001 mark. I also bear in mind that the defendants' services were identical to the registered class 35 services for the 001 mark, until January 2020, and of moderate similarity thereafter. Those similarities are, however, in my judgment outweighed by the clear visual and conceptual differences between the marks, and the context of use by the defendant which also points away from a likelihood of confusion. It is also significant that despite extensive searches of many millions of emails on both sides, and many years of parallel trading, no instance of genuine confusion has been identified."
Taking account of all of those factors, she did not consider there to have been a likelihood of indirect confusion between the defendants' signs and the EU10584001 mark.?
Unfair Advantage or Detriment
easyGroup alleged that the defendants had infringed its marks under art 9 (2) (c) of the EU Trade Mark Regulation as well as under art 9 (2) (b).? ? Art 9 (2) (c) provides: "Without prejudice to the rights of proprietors acquired before the filing date or the priority date of the EU trade mark, the proprietor of the EU trade mark shall be entitled to prevent all third parties not having his consent from using in the course of trade, in relation to goods or services, any sign where:
…
(c) the sign is identical with, or similar to, the EU trade mark irrespective of whether it is used in relation to goods or services which are identical with, similar to or not similar to those for which the EU trade mark is registered, where the latter has a reputation in the Union and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the EU trade mark."
There was no similar allegation in? Morley's (Fast Foods) Ltd.’s case.
Mrs Justice Bacon referred to para [55 ]of Lord Justice Arnold’s judgment in Match v Muzmatch [2023] EWCA Civ 454 where he said that 9 conditions must be satisfied in order to establish infringement under art 9 (2) (c) of the EU Trade Mark Regulation:
(i) The registered trade mark must have a reputation in the relevant territory;
(ii) there must be use of a sign by a third party in the relevant territory;
(iii) the use must be in the course of trade;
(iv) it must be without the consent of the proprietor;?
(v) it must be of a sign which is identical with or similar to the trade mark;?
(vi) it must be in relation to goods or services;?
(vii) it must give rise to a link between the sign and the trade mark in the mind of the average consumer;?
(viii) it must give rise to one of three types of injury, namely,?
(a) detriment to the distinctive character of the trade mark,?
(b) detriment to the repute of the trade mark, or?
(c) unfair advantage being taken of the distinctive character or repute of the trade mark; and?
(ix) it must be without due cause:
There was no issue as to conditions (i) to (vi). The disputed conditions were (vii) to (ix).?
Her ladyship considered first whether there was a link between its marks and the defendants' signs. ? She did not consider that the "easyCOSMETIC" word sign would create a link to the claimant's marks in the mind of the average consumer. The sole linking factor is the use of the word "easy" at the start of the marks and the sign. She had already found that there was no likelihood of confusion for this or the other two disputed signs,? The defendants' retailing services were very different from the airline services for which the claimant's marks had a reputation. ? The analysis of the white and black sign was not materially different.? A slightly heavier font had been used for the word "easy" which had some modest similarity to the Cooper Black font used for the easy family of marks but that was counterbalanced by other visual elements such as differences in colour and capitalization. ? The only sign where there was arguably a link was the orange/black sign where there were similarities in colour and stylization between the claimant's marks and the wider family of marks.
In view of her finding on links between the defendants' signs and the claimant's marks, any detriment to those marks would have to have resulted from the defendants' use of the orange and black sign.? The learned judge could find no evidence of any actual or likely change in consumer behaviour in respect of any of the marks. The claimant had suggested that there could be damage to the strength of the family of marks if third parties used the same or similar stylization but that was unlikely given the differences in stylization between the signs and marks in the family.? It was also irrelevant as art 9 (2) (c) was concerned with detriment to the distinctive character of marks rather than to the reputation of families of marks. As for "unfair advantage" the claimants had submitted that the link between the orange and black sign and the marks allowed the defendants to "trade on the trust that people have in the easy family of brands" such that customers might choose the defendants' services when they might not otherwise have done so.? Mrs Justice Bacon described that submission as the high point of easyGroup's analysis but could find no evidence to support it.
She held that there had been no infringement under art 9 (2) (c) of the EU Trade Mark Regulation.
Revocation
Art 58 of the EU Trade Mark Regulation provides: "1. The rights of the proprietor of the EU trade mark shall be declared to be revoked on application to the Office or on the basis of a counterclaim in infringement proceedings:
(a) If, within a continuous period of five years, the trade mark has not been put to genuine use in the Union in connection with the goods and services in respect of which it is registered, and there are no proper reasons for non-use;
?…...............................................................................................................................
2. Where the grounds for revocation of rights exist in respect of only some of the goods or services for which the EU trade mark is registered, the rights of the proprietor shall be declared to be revoked in respect of those goods or services only."
easyGroup had registered? EU10584001 in relation to the following services in class 35:
"Retail services connected with the sale of food and drink, preparations and substances for use in the care and appearance of the hair, lips, face, skin, nails and eyes, cosmetics, perfumes, fragrances, colognes and scents, sun-screening and tanning preparations, sunglasses."
The defendants sought revocation of the mark for the services in class 35 services except in so far as those services were provided to passengers on an aeroplane, described as "in-flight retail".
Mrs Justice Bacon considered the principles for determining whether there had been genuine use of a trade mark which had been summarized by Lord Justice Arnold at para [106] of his judgment in easyGroup v Nuclei [2023] EWCA Civ 1247:
"i) Genuine use means actual use of the trade mark by the proprietor or by a third party with authority to use the mark.
ii) The use must be more than merely token, that is to say, serving solely to preserve the rights conferred by the registration of the mark.
iii) The use must be consistent with the essential function of a trade mark, which is to guarantee the identity of the origin of the goods or services to the consumer or end user by enabling him to distinguish the goods or services from others which have another origin.
iv) Use of the mark must relate to goods or services which are already marketed or which are about to be marketed and for which preparations to secure customers are under way, particularly in the form of advertising campaigns. Internal use by the proprietor does not suffice. Nor does the distribution of promotional items as a reward for the purchase of other goods and to encourage the sale of the latter. But use by a non-profit making association can constitute genuine use.
v) The use must be by way of real commercial exploitation of the mark on the market for the relevant goods or services, that is to say, use in accordance with the commercial raison d'être of the mark, which is to create or preserve an outlet for the goods or services that bear the mark.
vi) All the relevant facts and circumstances must be taken into account in determining whether there is real commercial exploitation of the mark, including: (a) whether such use is viewed as warranted in the economic sector concerned to maintain or create a share in the market for the goods and services in question; (b) the nature of the goods or services; (c) the characteristics of the market concerned; (d) the scale and frequency of use of the mark; (e) whether the mark is used for the purpose of marketing all the goods and services covered by the mark or just some of them; (f) the evidence that the proprietor is able to provide; and (g) the territorial extent of the use.
vii) Use of the mark need not always be quantitatively significant for it to be deemed genuine. Even minimal use may qualify as genuine use if it is deemed to be justified in the economic sector concerned for the purpose of creating or preserving market share for the relevant goods or services. For example, use of the mark by a single client which imports the relevant goods can be sufficient to demonstrate that such use is genuine, if it appears that the import operation has a genuine commercial justification for the proprietor. Thus there is no de minimis rule.
viii) It is not the case that every proven commercial use of the mark may automatically be deemed to constitute genuine use."
Lord Justice Arnold added at para [107] that the General Court had stated in para [25] of its judgment in Case T-78/19 Lidl Stiftung & Co KG v European Union Intellectual Property Office ?ECLI:EU: T:2020:166, [2020] EUECJ T-78/19, EU: T:2020:166 that genuine use of a trade mark cannot be proven by means of probabilities or suppositions, but must be demonstrated by solid and objective evidence of effective and sufficient use of the trade mark on the market concerned.? The smaller the commercial exploitation of the mark, the more necessary it is for the proprietor to produce additional evidence to dispel doubts as to the genuineness of its use.
As regards partial revocation under art 58 (2) of the EU Trade Mark Regulation, the learned judge referred to paras [243] to [248] of Lord Justice Kitchin's judgment in Merck v Merck Sharp & Dohme? [2018] ETMR 10, [2017] EWCA Civ 1834 which summarized the guidance of the General Court in Case T-126/03 Reckitt Benckiser (Espa?a) v OHIM (ALADIN) EU: T:2005:288, [2005] ECR II-2861, Case T-256/04 Munduoharma AG v OHIM (RESPICUR) EU: T:2007:46, [2007] ECR II-449 and Case T-258/08 Matthias Rath v EUIPO EU: T:2017:22:
"i) First, it is necessary to identify the goods or services in relation to which the mark has been used during the relevant period.
ii) Secondly, the goods or services for which the mark is registered must be considered. If the mark is registered for a category of goods or services which is sufficiently broad that it is possible to identify within it a number of subcategories capable of being viewed independently, use of the mark in relation to one or more of the subcategories will not constitute use of the mark in relation to all of the other subcategories.
iii) Thirdly, it is not possible for a proprietor to use the mark in relation to all possible variations of a product or service. So care must be taken to ensure that this exercise does not result in the proprietor being stripped of protection for goods or services which, though not the same as those for which use has been proved, are not in essence different from them and cannot be distinguished from them other than in an arbitrary way.
iv) Fourthly, these issues are to be considered having regard to the perception of the average consumer and the purpose and intended use of the products or services in issue. Ultimately it is the task of the tribunal to arrive at a fair specification of goods or services having regard to the use which has been made of the mark."
Mrs Justice Bacon summarized at para [50] of her judgment the Court of Justice's guidance in Case C-714/18 P ACTC v EUIPO EU: C:2020:573 Ferrari and Cases T-221 and 242/22 Pharmaselect v EUIPO (LUTAMAX) EU: T:2023:858:
" i) Since a trade mark proprietor cannot in practice prove that the mark has been used for all conceivable variations of the goods concerned by the registration, the definition of a subcategory of the goods or services cannot be based on any and all commercial variations of similar goods or services. Rather, it requires the identification of goods or services that are sufficiently distinct to constitute coherent categories or subcategories: LUTAMAX §62.
ii) The purpose or intended use of the product or service in question is the essential criterion for defining an independent subcategory of goods or services: ACTC §44; Ferrari §40; LUTAMAX §64.
iii) The facts that goods are aimed at different groups of people and are sold in different shops are not relevant criteria for defining an independent subcategory of goods: ACTC §53. Likewise the particular market segment in which the goods are sold, such as the market for luxury goods of the particular type, is not a relevant defining feature for the purpose of identifying an independent subcategory of the relevant class of goods: Ferrari §§42–50."
Finally, it appeared to the judge from para [39] of Lord Justice Aldous's judgment in Thomson Holidays v Norwegian Cruise Line [2002] EWCA Civ 1828 that the court's determination of a fair specification of the goods or services, having regard to the use made of the mark, does not require the court to adopt a blue-pencil approach. The fair specification may instead be achieved by adding a qualification to the specification. In that case the specification of "arrangement and booking of travel and tours" was qualified by adding "words to the effect that the services were all for package holidays".
The judge acceded to the defendants’ application.
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