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Exclusive Rights

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  1. 1 Trade marks have little in common with other types of intellectual property, but one thing they do share is that they confer exclusive rights on the owner. These rights are by no means a monopoly, as they are normally limited to specific goods or services and those lying just outside the periphery. Trade mark rights do not enable the owner to prevent another person using their trade mark in all possible ways, as a patent or registered design does, or to prevent copying, as does copyright. The area in which the exclusive rights operate is narrowly drawn, mainly by reference to the goods or services for which the trade mark is registered, which is consistent with the idea of a trade mark as a component of a business’s goodwill. Copyright and design laws may also protect subject-matter that looks the same as a trade mark, but they are concerned not with the trade mark itself as a symbol of business goodwill, but with a work or design that happens to function as a trade mark The owner of a registered trade mark has the exclusive right to the mark: note that this is not the exclusive right to use the mark, which is what the 1938 Act provided for, although section 9(1) of the Act does say that the owner’s exclusive rights are infringed by use in the UK without consent. Section 10 sets out the sorts of acts which are infringements, while section 11 (plus section 10(6)) provides for exceptions to protection. The directive says nothing about use of a trade mark other than to define infringing use. There is no express need for a commercial connection, or what is known as ‘trade mark use.’1 In the debates on the bill, the government said that the requirement for trade mark use is inherent in the wording of the section, which seemed at the time to be common sense. This meant that, unless there was some sort of trading activity, use as an Internet domain name (not something that bothered people in 1994) probably would not infringe. But since the 1994 Act, and the Community Trade Mark Regulation, came into operation, common sense seems to have played a smaller and smaller part in trade mark law, and the notion of what constitutes trade mark use has expanded considerably, as we will see. The proprietor’s rights have effect from the date of registration. Section 40(3) provides that this will be the date of filing the application: and the date of filing may, in the case of an application claiming priority under the Paris Convention from an earlier filing overseas, be the priority date. Infringement proceedings may not be brought until the mark has been registered. Up to that point, there is no right to be infringed. However, the date from which the mark becomes operational from the point of view of the criminal provisions of the legislation is earlier: proceedings may be brought under section 92 if the application has been published. These provisions respectively re-enact the present position regarding infringement proceedings, and follow the general principle in criminal law that penalties should not be imposed with retrospective effect. For there to be an infringement, two elements must be present. First, there must be an act of infringement within the meaning of the Act, and second, it must be within the scope of protection enjoyed by a registered trade mark. Section 11 (and section 10(6)) provides statutory defences, and a defendant may also raise other defences to show that no infringement has taken place. It also has the possibility of challenging the claimant’s trade mark – either arguing that it is invalid (and should never have been registered) or it should be revoked. Counterclaims alleging invalidity or seeking revocation are common in trade mark claims: so too are back-up passing-off claims, because they can survive a challenge to the trade mark registration and give the claimant a second chance of success. Section 9(1) tells us that the proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in the UK without his consent. This has been described by Jacob J (in British Sugar) as ‘really no more than a chatty introduction to the details set out in section 10, itself adding no more than that the acts must be done without consent.’ But note that the section gives exclusive rights in the trade mark – not exclusive rights to use it: so does use have to be trade mark use (to indicate a connection in the course of trade between the goods and the proprietor or registered user of the trade mark) or is the concept of infringement wider? In British Sugar, Jacob J seemed to reject any such restriction, hold use in relation to the goods sufficient. Section 10 speaks neutrally of use of a sign: this suggests that trade mark use is not necessary. The other view was taken in Bravado Merchandising Ltd v Mainstream Publishing Ltd2 although it was held that the use of the name Wet Wet Wet in the title of a book about the band was use in a trade mark sense, though not trade mark use. It identified the book’s subject matter, but not as an indication of origin. However, this appears to apply a gloss to the statutory wording which Jacob J’s approach does not: the latter should therefore be preferred. Finally, in Trebor Bassett Ltd v The Football Association3 Rattee J rejected the claim of infringement as the mark (the three lions logo used by the England football team) was not used in relation to the relevant goods. In British Sugar Jacob J observed that the Wet Wet Wet trade mark was not registered for books: perhaps this provides a rationale for these decisions. The fact that (as Jacob J noted in British Sugar) section 10 (like Article 5 of the Directive) uses the neutral word ‘sign’ while section 9(1) uses ‘trade mark’ confuses the matter no end. Under the old law, trade mark use – use to indicate origin – was an essential component of an infringement,4 and the Court of Justice says that use of a sign in commerce is not all that is required (making British Sugar wrong). But what constitutes an infringement is still a great deal wider than it was under the old law: in stating that there must be a use which affects the essential function of the trade mark5 the Court has made it possible for trade mark owners to stop anyone seeking to take unfair advantage of the status and repute of the trade mark. So there is still a requirement for trade mark use, but it is much broader than previously. The Arsenal decision tells us that the law now protects the wider function of a trade mark as a vehicle for ‘creating and retaining custom’. The Court referred to its earlier jurisprudence (dating back to the old parallel importation cases of the seventies and eighties) on what is the essential function of a trade mark, and the trade mark’s role guaranteeing commercial origin and quality. It emphasised the important role played by trade marks in promoting competition in the internal market, and said that the exclusive rights conferred on trade mark owners are to enable their specific interests to be protected. Allowing a third party to use the sign would be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing the origin of the goods. Subsequent cases, as we shall see, have built on this foundation, proposing new functions for trade marks almost on a case-by-case basis. The Court has helpfully provided a summary of the definitive requirements for liability for infringement, expressed in four conditions: The use complained of must be in the course of trade. It must be without the consent of the trade mark owner. It must be in respect of goods or services. It must affect, or be liable to affect, the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services.6 The General Court elaborated on the first of these requirements in Case T-195/00, Travelex Global and Financial Services Ltd v Commission7 – an unusual case in which the trade mark owner challenged not another trade mark but the adoption of the € symbol. The Court (relying on Arsenal) dismissed the claim of trade mark infringement, saying that the Commission’s use of the symbol was not ‘use in the course of a commercial activity whereby goods or services are manufactured and supplied in a particular market.’8 In Electrocoin Automatics Ltd v Coinworld Ltd 9 the High Court held that just because a gaming machine displayed the characters OXO did not mean that the claimant’s OXO trade mark had been infringed, as the use was not in the course of trade. In RxWorks the court suggested that use ‘in the course of trade’ required use ‘in the course of a commercial activity with a view to gain and not as a private matter’, which seems to approach the matter from a different direction. The defendant in an infringement action may be able to argue that what it did was done with the trade mark owner’s consent. It sounds strange, because surely the owner would know what it had consented to, but it worked in Northern & Shell v Condé Nast10 where both parties held licences to publish magazines under the title PENTHOUSE, and Jacob J held that both were using the mark with consent. The Directive uses the simple preposition ‘for’ when it talks of use and goods or services, whereas the Trade Marks Act, in a demonstration of the prolixity commonly associated with lawyers, prefers the compound preposition ‘in relation to’. The Court of Justice, neutrally, has gone for ‘in respect of’.11 The Trebor Bassett case shows us what is not ‘in relation to’ goods or services, where the incidental use of the England football team’s ‘three lions’ symbol was not use in relation to the sweets with which the cards depicting members of the team were distributed. Where a mark is used by a customer ordering goods from the alleged defendant, but not by the defendant itself, there is no use ‘in relation to’ the goods. Use on invoices, on the other hand, is use ‘in relation to’ the goods.12 The key to understanding the difference lies, as does so much of the law in this area, in the Arsenal decision of the Court of Justice. There, the Court said that the national court should consider why the defendant used the trade mark: was it to help the defendant sell its goods or services? This sheds light on the meaning of ‘in relation to’ (or ‘in respect of’), and also indicates that misappropriation rather than indication of origin is at the heart of trade mark protection. The average consumer, whom we have already encountered in trade mark law, makes an appearance again in the fourth condition of the Céline test. Whether the use of the mark is trade mark use has to be viewed through the average consumer’s eyes. In Case C-48/05, Adam Opel AG v Autec13 it was whether the consumer would perceive the mark as indicating that the defendant’s toy cars were made by the claimant, or whether the mark was simply part of the authentic appearance of the goods. The more important the consumer considered the fidelity of the model, the less the use would undermine the trade mark’s function. Contrast this with Arsenal, where (on the facts, of course: the case is notable for the fact that Laddie J, having referred questions to the Court of Justice, took the view that the judges in Luxembourg had disagreed with his findings of fact and therefore exceeded their jurisdiction; applying the Court of Justice’s answers to the facts as he had found them, he decided that the Court had actually supported his view, and held that there was no infringement because the defendant’s products indicated allegiance to Arsenal rather than trade origin, but the Court of Appeal thought otherwise) the consumer’s perception was that the club had guaranteed the origin of the merchandise. The Court of Appeal (Aldous LJ) observed that, to the average consumer, a badge could serve to indicate both origin and allegiance. Where the alleged infringement is under section 10(3) (dilution), the important question is whether the defendant’s use of the sign produces an association in the mind of the average consumer. In Case C-xxx/xx, Adidas-Salomon AG and Adidas Benelux BV v Fitnessworld Trading Ltd14, the Court of Justice said that just because a sign (in suit, the three stripes which forms an important part of Adidas’s get-up) be viewed by the relevant section of the public as an embellishment did not mean that the defendant’s use of a similar sign would not infringe. The question was whether the degree of similarity was such that the relevant section of the public established a link between the sign and the mark. In the right circumstances, even decorative use of a figurative mark might infringe. Section 10 contains the details of what constitutes an infringement. It implements Article 5 of the Directive, and replaces the old Act’s sections 4 and 5. The rights granted are much wider than under the 1938 Act: infringement is no longer restricted to use on the goods or services for which the mark is registered, but covers similar goods and services and in some cases (perhaps very rare) dissimilar goods or services. The first situation is where there is unauthorised use of a mark identical to the registered mark on goods or services for which that mark is registered. This was an infringement under the 1938 Act, and will be an infringement under the 1994 Act. There is no question of having to show that confusion is caused by this use: because of the identity of the marks and of the goods or services, confusion is considered inevitable and need not be demonstrated. In Datacard v Eagle15 Arnold J said six conditions are required to establish a case of ‘double identity infringement’: The case law of the Court of Justice of the European Union establishes that the proprietor of a registered trade mark can only succeed in a claim under Article 5(1)(a) of the Directive if six conditions are satisfied: (i) there must be use of a sign by a third party; (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 identical to the trade mark; (v) it must be in relation to goods or services which are identical to those for which the trade mark is registered; and (vi) it must affect or be liable to affect the functions of the trade mark ...16 Section 10(2) describes two situations where due to similarities between either the marks or the goods or services unauthorised use of a mark may infringe. The first is where an identical mark is used on goods or services similar to those for which the mark is registered: the second is where a similar mark is used on similar goods or services. In these cases, the law does not assume that confusion will inevitably result. It requires that the proprietor of the mark shows that the public is likely to be confused by the junior use. This expressly includes the situation where there is a likelihood of association between the registered mark and the other sign. This covers the impression of association that two signs, though they can be distinguished visually, may produce in the consumer’s mind. This, then, extends the rights of the proprietor: previously it was only possible to take action for infringement if the goods or services on which the infringing mark was used were within the specification of the senior mark. It also has the consequence that the Registry will take a somewhat different view of overly-broad specifications when applications are examined. The need to cover a wide range of goods is reduced by the possibility of suing for use on goods or services which are merely similar, so the Registry is likely to be less prepared to allow wide specifications. In the United States, the courts have recognised that confusion may arise but then be resolved, but that harm may still be done. The consumer, having become interested in the defendant’s goods or services because the defendant used an infringing sign, may continue to do business with them even after realising that the defendant is not the party they thought they were. Whether there is a doctrine of initial interest confusion in English law is debatable. In Och-Ziff Management Europe Ltd & Anor v Och Capital LLP & Anor 17Arnold J said that there is. In Specsavers18 Kitchin LJ was reluctant to put the expression into general circulation: 86 It is not entirely clear to me what Arnold J and the parties had in mind by the phrase ‘circumstances prior to, simultaneous with and subsequent to the use of the sign’ but it must, I think, be seen in light of the particular and rather specific issue in that case, namely whether Article 9(1)(b) extended to confusion arising from use of the sign in advertising and promotional materials, so called ‘initial interest confusion’, whether or not any sale resulted and whether or not the consumer remained confused at the time of any such sale. The judge held that initial interest confusion was actionable. At least in the circumstances of that case, it mattered not that it was dispelled at a later time. 87 In my judgment the general position is now clear. In assessing the likelihood of confusion arising from the use of a sign the court must consider the matter from the perspective of the average consumer of the goods or services in question and must take into account all the circumstances of that use that are likely to operate in that average consumer's mind in considering the sign and the impression it is likely to make on him. The sign is not to be considered stripped of its context. The differing approach from Arnold J (see Red Bull v Sun Marks 19) appears to be theoretical rather than actual. The question of confusion must be considered from the perspective of the average consumer of the goods or services in question and must take into account all the circumstances. Article 5(2) of the directive (corresponding to Article 9(1)(c) CTMR) permits Member States to include a third form of infringement. It covers the unauthorised use of a sign which is identical or similar to a registered trade mark on goods or services which are not similar to those for which the mark is registered. Section 10(3) contains this provision, which parallels that in section 5(3) which deals with relative grounds for refusal of registration. Action may not be taken against this sort of use in every case. The Act sets threshold conditions: the mark must be one which has a reputation, and the use must without due cause take unfair advantage of or be detrimental to the distinctive character or the reputation of the mark. There is therefore no need for the goods on which the second mark is used to be in direct competition with the registered mark. The proprietor’s sales do not even have to be damaged. Article 9(1)(c) of the Community Trade Marks Regulation gives this extended form of protection to Community trade marks with a reputation in the Community. Does this mean a reputation throughout the Community, or will a reputation in part only of the Community suffice? If a mark has a reputation in part only of the Community, will the owner be able to stop dilution in that part only? These questions were raised in Case C-301/07, PAGO International GmbH v Tirolmilch registrierte Genossenschaft mbH,20 where the Court said: … a Community trade mark must be known by a significant part of the public concerned by the products or services covered by that trade mark, in a substantial part of the territory of the Community, and that, in view of the facts of the main proceedings, the territory of the Member State in question may be considered to constitute a substantial part of the territory of the Community. The problem of look-alike products became significant shortly before the passage of the new law. Despite energetic lobbying, brand owners were unable to obtain an amendment to the Act to protect their position. They are left with the extended scope of registration under the new Act and the law of passing off. Section 10(4) tells us what the Act means when it refers to use of a trade mark, amounting to infringements if done without authority. The list in the subsection is not exhaustive. It includes: affixing a mark to goods or their packaging; offering or exposing goods for sale, putting them on the market or stocking them under the sign, or offering or supplying services under the sign; importing or exporting goods under the sign; and using the sign on business papers or advertising. The wording is largely taken from Article 5 of the Directive, though the words ‘or exposing’ do not appear there. English law gives a restricted meaning to ‘offering the goods’, implying an actual offer: using the words of the Directive might not therefore catch merely displaying (or ‘exposing’) the goods in a shop window, for example. The Court of Justice has indicated that the goods must have been placed on the market.21 The wording used in the Act is also designed to catch the situation where a trader adopts the name of another as the name of a shop, selling the goods for which the mark is registered. Under the 1938 Act the infringing user could have argued that this was not ‘use’ since it was not use upon or in physical relation to the goods.22 The development of keyword advertising on the World Wide Web has raised novel problems of trade mark infringement. The idea is that the advertiser pays a search engine provider to ensure that when a user of the search service types in the keyword the search engine displays a sponsored link in a prominent position among the results. If the advertiser has paid for a keyword which coincides with its own name or trade mark, of course, that raises no problems, but crafty advertisers bought keywords that coincided with their competitors’ trade marks, leading to distorted search results. Although the best-known (to the courts as well as to the public) keyword advertising system if Google’s ‘Adwords’, the earliest case before the English courts is Wilson v Yahoo! Ltd 23, which was dismissed summarily as disclosing no arguable cause of action. In Joined Cases C-236/08 to C-238/08, Google France v Louis Vuitton,24 the Court of Justice held that allowing businesses to bid for Adwords was not using trade marks in the course of trade, it only created the technical conditions necessary for advertisers to use the marks. But while Google were not infringing, the same was certainly not true of advertisers. The display of the sponsored link was liable to create the impression that there was a material material link between the advertiser’s goods or services and the owner of the trade mark. The trade mark’s ability to distinguish one party’s goods or services from those of the other would be undermined, so there would be infringement, although the national courts would have to decide in each case whether the distinguishing function had in fact been, or was likely to be, affected. Where the defendant is selling second-hand goods, it is likely that using a keyword that corresponds to the trade mark of a manufacturer of those goods will automatically be applied to goods made by others. Such was the case in Case C-558/08, Portakabin Ltd v Primakabin BV25 where the defendant dealt in temporary buildings, not all of which were made by the claimant. The Court of Justice, with typical prolixity, said: Article 5(1) [of the Directive] ... must be interpreted as meaning that a trade mark proprietor is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with, or similar to, that mark, which that advertiser has selected for an internet referencing service without the consent of the proprietor, in relation to goods or services identical to those in respect of which the mark is registered, where that advertising does not enable average internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or from an undertaking economically linked to it or, on the contrary, originate from a third party. Interesting points arise about the defences available under Article 6 (section 11(2) of the Act) and Article 7 (section 12), which are discussed below, paragraphs and . Importing and exporting goods under the sign is also ‘use’ for the purposes of the Act. Section 31 of the old Act covered exporting: whatever would be use of the trade mark if done with goods or services supplied in the UK will be an infringement if the goods or services to which the mark is applied in the UK are to be supplied abroad. Importing infringing goods infringes the proprietor’s rights even before the goods are placed on the market. Action can therefore be taken immediately the goods enter the country. Customs and Excise may also be given notice to treat goods bearing infringing trade marks as prohibited goods (section 89 and EC Council Regulation 3842/86). Even if the goods are imported and immediately re-exported, an infringement may take place: Waterford Wedgwood plc v David Nagli Ltd.26 But in Diesel and in Case C-405/03, Class International BV v Colgate Palmolive 27 it was held that placing goods in a transit warehouse did not mean that they had entered the EU or been placed on the market. The Court of Appeal in Eli Lilley & Co v 8PM Chemist 28 held that the trade mark owner could not object to goods in transit. In Class, the goods were in transit between two non-EU countries and in Diesel to a Member State where there was no protection. Use of a trade mark on business papers or advertising material is also caught by the Act. This provision is aimed at use of the mark to describe the goods of the person using the mark, not in comparative advertising (where the mark is used to identify the proprietor’s goods), a situation covered by section 10(6). Anyone applying a registered trade mark to labelling or packaging materials, business papers or advertisements for goods or services may be treated as a party to any use of the material which infringes the rights of the proprietor. There is a requirement here that at the time of applying the mark the printer, etc., knew or had reason to believe that the application of the mark was not authorised by the owner of the mark or a licensee. The test is objective, and examines the defendant’s behaviour against the standard of a reasonable person in that line of business.29 This provision is aimed at printers and others who print or otherwise deal in labels or packaging bearing a trade mark with the intention that they be used on infringing goods. The 1938 Act took a narrow view of what could be an infringing use. It required that such use be a visual representation of the mark: spoken use, in a television advertisement or by a seller, was not an infringement. Now, non-visual use of a trade mark is included within the definition of ‘use’ in section 103. The infringing conduct must take place within the UK. What about an advertisement on a website stored on servers in another jurisdiction? The claimant will have to show that it was aimed at customers in the UK, and that those customers can order goods and pay in sterling.30 As with other types of intellectual property, trade mark law derogates from the protection it gives by permitting certain acts that would otherwise be infringements. Most of these are found in section 11, although section 10(6) also deals with a situation in which using someone else’s trade mark is permitted. But before we consider the statutory defences available under the Trade Marks Act, we must look at what a defendant may do to defeat a claim of infringement by showing that what it is doing simply does not fall within the definition of an infringement. What constitutes an infringement is carefully defined in the legislation, so there is considerable scope for an accused infringer to argue that the law does not regard his activity as an infringement. These matters have already been covered above: it is open to the defendant to contend that what it is doing has the trade mark owner’s consent (see paragraph ), and that it is not trade mark use (see section ). Comparative advertising may be ‘brand-neutral’ (simply stating that the advertiser’s goods or services are superior to, or cheaper than, unnamed others on the market) but it often involves use of the proprietor’s mark to identify proprietor’s goods for the purposes of comparison. When the other party’s trade mark is mentioned, it may amount to infringement. Comparative advertising may also be actionable for passing off (on which see MacDonalds v Burger King31). Comparative advertising takes a number of forms, ranging from price comparisons to ‘knocking copy’ (News Group Newspapers Ltd v Mirror Group Newspapers (1986) Ltd32) and advertisements which describe goods by referring to their similarities with other manufacturers’ goods (Chanel Ltd v Triton Packaging Ltd33). Comparative advertising is covered by Article 5(5) of the Directive, which states: [Article 5] shall not affect any provision in any Member State relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services, where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark. The government considered that this entitled the UK to provide that comparative advertising should be an infringement, changing the law from the 1938 Act.34 Nevertheless, the fact is that Article 5(1) and (2) make no mention of comparative advertising as a form of infringement, though on the other hand they could be considered to come within the definition of infringement without having to be mentioned expressly. Section 10(6) provides that the use of a registered trade mark to identify goods or services as those of the proprietor or licensee will never be an infringement. However, any such use must be ‘in accordance with’ honest use in industrial or commercial practices: this wording is taken from Article 10 bis of the Paris Convention, where it is intended to define what amounts to fair competition. If it is not, it is treated as being an infringement if it also meets a second condition, that without due cause it takes unfair advantage of the distinctive character or repute of the mark. This wording was adopted from Article 5(3), the provision of the Directive that deals with dilution. The first leg of this two-part proviso is an addition to the provision of the Directive. It is also difficult to predict how it will be applied: will it be industry-specific, in which case its application in, for example, the motor industry will be different from that in other sectors? There have been several cases on comparative advertising under the new law. In Barclays Bank plc v RBS Advanta35 Laddie, J. (who was highly critical of the wording of Section 10(6)) held that it was not necessary to present the reader of advertising material with all the information about a competitor’s product, whether favourable or unfavourable to the comparative advertiser. The proviso has also been considered in Vodaphone Group plc v Orange Personal Communications36 and BT v AT&T Communications.37 The test is an objective one: would a reasonable reader be likely to say, on being given the full facts, that the advertisement is not honest? Codes of conduct are of no assistance in judging the reaction of the public: but the public are considered to expect hyperbole in advertisements. The words ‘takes unfair advantage of’ add, in Laddie J’s view, nothing. In British Airways v Ryanair 38 Jacob J remarked that, despite the fact that it was clearly designed to permit comparative advertising, the drafting of section 10(6) left something to be desired. He said that, provided the use of the competitor’s mark was honest, there was nothing wrong in telling the public about the relative merits of the parties’ goods or services. The advertisement complained of had to be judged through the eyes of the relevant public, and words would bear their natural meaning: members of the relevant public were deemed to be familiar with hype. Minute textual analysis of the advertisement was not appropriate, as this was not how members of the public would read the advertisement. The purpose of the Act was not to impose a more puritanical standard than the general public would expect. In that case, BA’s claims were dismissed, in some instances surprisingly, but it is a prime example of how the way a case is presented can have a major impact on the development of the law. According to an article at the time in the journal Commercial Lawyer, the claimants came to court with a distinct lack of witnesses to support their claims. The issue of comparative advertising is also addressed by the directive on misleading advertising39 which prohibits use of trade marks in comparative advertising except where necessary to identify the compared goods or services, provided the comparison does not extend to the competitor’s person or circumstances and where justification can be produced. This is intended expressly to permit comparative advertising in certain circumstances: the advertisements must not be misleading; they must compare goods or services that meet the same needs or are intended for the same purpose; they must be objective and compare only material, relevant, verifiable and representative features of goods or services, which may include price; there must be no confusion between the goods of the advertiser and those of the competitor; the advertisements must not ‘discredit denigrate or bring contempt on a competitor or his trade marks ... or capitalise on the value of a trade mark ... of a competitor’; and the advertisements must not take unfair advantage of the reputation of a trade mark. These limitations were already imposed by the British Code of Advertising Practice. It would be inconsistent with the directive to make all comparative advertising an infringement, so section 10(6) was designed to meet the requirements of that directive. This explains its departure form the wording of the trade marks directive: if it had stuck to the provisions of Article 5(5), it would have had the result of prohibiting all comparative advertising, as in the Benelux, subject only to the interpretation placed by the courts on the words ‘without due cause’. These will probably be taken to require necessity or prior right, and the exception would be extremely narrow. The Court of Justice considered how the comparative advertising directive and the trade marks directive worked together, in Case C-533/06, O2 Holdings Ltd v Hutchison 3G Ltd40. Taken together, they create a comparative advertising defence to a trade mark infringement claim. Section 11 begins by telling us that a registered trade mark is not infringed by the use of another registered trade mark on goods or services for which it (the second mark) is registered. This situation would not have arisen very often in the pre-2006 regime, since the point of the pre-grant search and subsequent refusal of registration was to avoid such conflicts arising: however, as the onus is now on the owner of earlier rights to oppose the application, it is much more likely to happen. If the situation is encountered, it would probably be one in which an action for a declaration of invalidity of the registration would be appropriate. Section 11(1) provides that it is not an infringement of a trade mark to use one’s own registered trade mark. In theory, the junior trade mark only became registered because there was no conflict with the senior one: so how can a conflict arise after registration? Certainly, the better (one might think the proper) course would be to seek a declaration of invalidity (or, in the parlance of the European Community trade mark system, cancellation). However, in a CTM case, Case C-561/11 Fédération Cynologique Internationale v Federación Canina Internacional de Perros de Pura Raza, a reference from the Juzgado de lo Mercantil No 1 de Alicante (sitting as Community Trade Mark Court No 1), the Court of Justice held ‘that the exclusive right of the proprietor of a Community trade mark to prohibit all third parties from using, in the course of trade, signs identical with or similar to its trade mark extends to a third-party proprietor of a later registered Community trade mark, without the need for that latter mark to have been declared invalid beforehand.’ But section 11(1) is a home-grown provision, not one based on a provision of the Directive, so while that case is instructive it does not bear directly on the section. There are time limits on when an action for a declaration of invalidity can be brought. It would not be right for a registration to remain vulnerable for ever – there has to be a point at which the owner can be certain that the trade mark will not face an invalidity claim. This means that there might be circumstances in which the defendant is unable to knock out the claimant’s registration, so section 11(1) has an important though infrequent role to play. The junior mark must have been used in the form in which it was registered. This too reflects to need for legal certainty. In Neutrogena v Golden Ltd t/a Laborotoires Garnier 41 the defendant’s registered trade mark was NUTRALIA, but in use it had been rendered NEUTRALIA. A small difference, but sufficient (according to Jacob J) to create different imagery in the mind of the consumer and deny them the ability to rely on the defence. Although the expression does not appear in the legislation (it is American in origin), ‘nominative fair use’ neatly encapsulates the next three exceptions to copyright protection. Nominative, because the sign is used as a name; fair use, because the legislation requires that it be used according to honest practices in industrial and commercial matters (an extremely important proviso). If this proviso is met in the listed situations, it will not infringe rights in registered trade marks. The ‘honest use’ test is an objective one, taking into account all the surrounding circumstances including the defendant’s motive: see The European Ltd v Economist Newspapers Ltd42 and Scandecor Devel0opment AB v Scandecor Marketing AB43. The words of the proviso are taken from the definition of unfair competition in Article 10bis of the Paris Convention. In Case 63/97, BMW Nederland v Deenik44 the Court said that the use must not mislead customers into thinking that the defendant’s business is linked to the claimant’s, or approved by it, and it must not tarnish the image of the trade mark. In Case C-100/02, Gerolsteiner Brunnen GmbH v Putsch GmbH45 the Court went further, saying ‘the conditions of hnest practice constitutes in substance the expression of a duty to act fairly in relation to the legitimate interests of the of the trade mark owner’. Descriptive use is not to be considered the opposite of trade mark use: every case depends on its facts and national courts must apply the test to determine whether the defendant has acted fairly in relation to the interests of the trade mark owner – as the Court of Appeal did in Reed. In Case Case C-228/03, The Gillette Company and Gillette Group Finland Oy v LA-Laboratories Oy46 the Court said that use of the claimant’s mark will not be within the proviso if it gives the impression that there is a commercial connection between the defendant and the trade mark owner (as in Deenik), it affects the value of the trade mark by taking unfair advantage of its distinctive character or repute, it discredits or denigrates the mark, or the defendant presents its product as an imitation or replica of the claimant’s product. Section 11(2) sets out what the situations are in which it is permissible to use someone else’s trade mark: Own name and address (re-enacting section 8 of the 1938 Act, but subject to the honest use requirement). The requirements of the proviso are not met where the defendant is trading on an established company’s goodwill.47 It will cover the use of a name adopted years before the use was questioned and used consistently in normal commercial ways. It covers a company name in the same way as the name of a natural person (Scandecor48) and it applies where a company uses its trading name (Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd49). Indications concerning the kind, quality, quantity, purpose, value, or geographical origin of goods or services; the time of production of goods or of rendering of services; or other characteristics of goods or services. This may amount to use of the trade mark in a trade mark sense, but accurately - to identify the products of the proprietor. In Allied Domecq Spirits and Wine Ltd v Murray McDavid Ltd50 Lord MacFadyen in the Outer House of the Court of Session considered that the question was whether the use by the defendant of the word Laphroiag was merely an indication of geographical origin or an oblique reference to the plaintiffs’ trade mark. Case C-2/00, Hölterhoff v Ulrich Freiesleben51 the mark was used to describe how diamonds were cut. In Deenik52 the Court of Justice held that a BMW specialist should be allowed to use the BMW trade mark in order to describe the services he offers, provided he did not hold himself out as being a BMW authorised dealer. However, in AB Volvo v Heritage (Leicester) Ltd53 Rattee J held that a former dealer had to go to some lengths to avoid any suggestion that it was still a member of the network, and accordingly held that the defendant had indeed infringed the Volvo trade mark in describing itself as a member of the Association of Independent Volvo Specialists and in other respects. Where it is necessary to use a registered trade mark to indicate the intended purpose of a product or service. This provision re-enacts and extends section 4(3)(b) of the 1938 Act. A spare part for a motor car would be difficult to sell if the vehicle manufacturer could enjoin the part-maker from using the name of the car which it would fit: so too with razor blades54. Likewise, service providers are allowed to use the name of the product even though it is a registered trade mark - though those who are inclined to describe themselves as ‘specialists’, especially in repairing or servicing motor cars, are likely to find the manufacturer pursuing them on other grounds, such as passing off. A particular issue arises with keyword advertising. The Court of Justice suggested that Article 6 (equivalent to section 11(2)) is unlikely to provide a defence, although that will be a matter for the national courts. In Case C-558/08, Portakabin Ltd v Primakabin BV55 the defendant, a dealer in second-hand temporary buildings, ‘bought’ the Adword ‘Portakabin’ from Google. It had stocks which included Portakabin products among others, so in effect the trade mark was being applied to other manufacturers’ goods. The defendant’s use was therefore likely to amount to an infringement (see above, para ) and it would be for the national courts to decide whether that use fell within the proviso. The rights of owners of earlier unregistered trade marks and other signs are protected by section 11(3) – but only to a very limited extent. Section 5(4) protects the owners of earlier rights which confer the right to stop the use of a later trade mark: the existence of those earlier rights is a bar to the registration of the later mark. Section 11(3) protects rights which do not come within the ambit of that provision. It covers rights which apply only in a limited geographical area, which precludes the possibility of using section 5(4). In this instance (though not in the case of section 5(4)) ‘earlier right’ means a sign which has been continuously used by the owner or her predecessor in business. It ‘applies in ... [a] ... locality’ if it has sufficient goodwill there to be protectable by an action for passing off, a matter which presumably can only be determined with any confidence if it actually has been protected by such proceedings. The earlier right will be protected under this subsection if it has been in continuous use since a date earlier than either the first use for the good or services in question of the later mark, or its registration for those goods or services in the name of the proprietor or her predecessor in title. The section differs somewhat from the wording of the directive. Article 6(2) provides: The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade, an earlier right which only applies in a particular locality if that right is recognised by the laws of the Member State in question and within the limits of the territory in which it is recognised. The use of the words ‘locality’ and ‘territory’ raises the interesting point that a mark may be recognised in a wider geographical area (a ‘territory’) than that in which it applies. In the Chelsea Man case56 the plaintiffs were able to obtain a nationwide injunction retraining the use of their mark despite the fact that the mark was used only on shops in London and Coventry. The mark was recognised over a much wider area. The section in the Act does not give effect to the word ‘territory’. The government believed that the addition of the last eleven words of Article 6(2) was unnecessary. They qualify the expression ‘laws of the Member State’, not ‘particular locality’. In other words, it was a provision relevant to countries which provided for registration of a trade mark at a local or municipal level but not for the UK. Before we move on, we must note the effect of section 48 which says that if the owner of a registered trade mark acquiesces in its use by someone else for five years, they cannot bring an infringement action. This only applies where both marks are registered, so it has a close relationship with section 11(1) (use of a registered trade mark), and the result of relying on section 48 will be stalemate – both marks will remain registered, and neither will infringe the other. See paragraph Error: Reference source not found. The principle that intellectual property rights are usually exhausted once goods have been put on the market by or with the consent of the rights-owner is a fundamental one in European Union law. It resolves the problems of parallel imports (parallel, that is, to those operated by the owner of the trade mark) that arise from having national intellectual property rights operating in a common market, and has generated a huge body of case law in the Court of Justice since the establishment of the European Communities. The principles laid down in cases involving trade marks were distilled into Article 7, implemented by section 21. Section 12 provides that the rights of the owner of a registered trade mark are exhausted once goods bearing the mark have been put on the market in the European Economic Area by the owner of the mark or with their consent. Article 7 of the Directive requires this, reflecting the jurisprudence of the Court of Justice under what was Article 36 of the Treaty of Rome (Article 34 TFEU): The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community [now the EEA] under that trade mark by the proprietor or with his consent. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market. The section repeats the article almost verbatim. The principle of exhaustion was also found in the 1938 Act, but in much narrower terms (sections 4(3)(a) and 6). Note that it is EEA-wide exhaustion only: it is not a global exhaustion rule, so goods placed on the market elsewhere in the world and imported by a third party into the EEA may be the subject of action by the trade mark owner. Where the goods were first put onto the market is therefore a very important question. When are goods considered to have been put on the market in the EEA? The Court of Justice addressed this question in Case C-16/03, Peak Holding AB v Axolin-Elinor AB57. The goods must have been sold, whether to consumers or to another company which has the right to dispose of them. Even if the contract purports to stop the purchaser reselling the goods in the EEA, the trade mark rights are exhausted (though a breach of contract action might lie). Goods have not been put on the market if they have just been stored in a warehouse58 or displayed in a shop window. However, goods provided without transfer of ownership and with a prohibition on resale have not been put on the market.59 Article 7 introduced an intra-EEA rule about exhaustion, replacing a situation in which it had been up to Member States to set their own rules (and, incidentally and controversially, derogating from the idea of a trade mark as an indication of origin). This was confirmed in Silhouette60 where the Court of Justice held that Member States were not allowed to go further than the wording of the directive and introduce a broader concept of exhaustion, so where branded goods are parallel-imported from outside the EEA (in the Silhouette case, sunglasses sold cheap in Bulgaria, not then an EU Member State, by the Austrian manufacturer and reimported by an Austrian discounter whom the manufacturer had previously refused to supply) it may infringe the rights of the trade mark owner to offer them for sale. However, it should be borne in mind in the UK that the provisions of section 10(6) and 11 may afford a defence in some cases, though if the seller does not state that the goods are parallel imports (and perhaps of inferior quality, or old stocks) it would be hard to conceive of this being in accordance with honest practices in industrial and commercial matters. The key question regarding parallel imports which originate outside the EEA is therefore, did the trade mark owner consent to their being marketed in the EEA? The cases show some inventive approaches to trying to convince the Court that the trade mark owner really did consent to the goods being in the EEA. In Case C-173/98, Sebago Inc. and Ancienne Maison Dubois v SA G-B Unic61 the Court said that it was not a matter of whether the trade mark owner had previously imported identical goods into the EEA: what mattered was whether the particular consignment of the goods was in the EEA with the owner’s consent. There is no doctrine of implied consent. The question, whether the goods have been placed on the market with consent has to be asked of each consignment.62 Laddie J could see no justification for a rule that discriminated between goods placed on the market in the EEA on the one hand and in Singapore or the USA on the other, in Zino Davidoff SA v A&G Imports Ltd63 but the Court of Justice disagreed with him, holding in that case (joined with others64) that consent must be expressed so as to demonstrate unequivocally the owner’s intention to give up their rights under Article 5. While this normally demands an express statement, it may be implied but the facts would have to demonstrate that the owner had unequivocally given up its rights, which is a formidable hurdle to get over. A failure to tell subsequent purchasers that the goods are not to be marketed in the EEA does not amount to consent: just because there is no warning notice on the packaging of the goods or restriction in the contract of sale, or the owner remains silent about the matter, consent will not be implied. And it is for the importer to show consent, not the owner to show a lack of it. The principle of exhaustion does not apply where the proprietor of the mark has legitimate reasons for opposing further dealings in the goods. This might be the case if the condition of the goods had changed or impaired after they had been placed on the market. Section 12(2) implements Article 7(2) of the Directive and is consistent with the judgements of the Court of Justice, concerning repackaging, rebranding, relabelling, and overstickering, though more broadly stated. Repackaging: In Case C-102/77, Hoffmann-La Roche v Centrafarm, the Court of Justice held that repackaging would be an infringement unless the trade mark owner’s conduct partitioned the market (for example by selling goods in different coloured packaging in different Member States), and provided that the importer indicated that the goods had been repackaged and gave notice to the trade mark owner, and that the repackaging does not affect the condition of the goods (referred to as ‘physical impairment’). Rebranding: If the parallel importer changes the branding on the goods from that used by the trade mark owner in country A to that used in country B, in order to make the goods more readily saleable in country B, that amounts to trade mark infringement. Early cases indicated that the trade mark owner must have intended to partition the market by its branding policy,65 but subsequently the Court has made clear that this is a matter to be judged objectively, without looking at the trade mark owner’s intention.66 Relabelling: Labels may contain identification numbers to facilitate product recalls as well as trade marks, and removing the original label and replacing it with a new one may amount to trade mark infringement, as in Case C-349/95, Frits Loendersloot v George Ballantine & Sons Ltd.67 The Court has elaborated what are referred to as the Bristol Myers Squibb68 conditions: Article 7(2) of Directive 89/104 must be interpreted as meaning that the trade mark owner may legitimately oppose the further marketing of a pharmaceutical product where the importer has repackaged the product and reaffixed the trade mark unless: it is established that reliance on trade mark rights by the owner in order to oppose the marketing of repackaged products under that trade mark would contribute to the artificial partitioning of the markets between Member States; such is the case, in particular, where the owner has put an identical pharmaceutical product on the market in several Member States in various forms of packaging, and the repackaging carried out by the importer is necessary in order to market the product in the Member State of importation, and is carried out in such conditions that the original condition of the product cannot be affected by it; that condition does not, however, imply that it must be established that the trade mark owner deliberately sought to partition the markets between Member States; it is shown that the repackaging cannot affect the original condition of the product inside the packaging; such is the case, in particular, where the importer has merely carried out operations involving no risk of the product being affected, such as, for example, the removal of blister packs, flasks, phials, ampoules or inhalers from their original external packaging and their replacement in new external packaging, the fixing of self-stick labels on the inner packaging of the product, the addition to the packaging of new user instructions or information, or the insertion of an extra article; it is for the national court to verify that the original condition of the product inside the packaging is not indirectly affected, for example, by the fact that the external or inner packaging of the repackaged product or new user instructions or information omits certain important information or gives inaccurate information, or the fact that an extra article inserted in the packaging by the importer and designed for the ingestion and dosage of the product does not comply with the method of use and the doses envisaged by the manufacturer; the new packaging clearly states who repackaged the product and the name of the manufacturer in print such that a person with normal eyesight, exercising a normal degree of attentiveness, would be in a position to understand; similarly, the origin of an extra article from a source other than the trade mark owner must be indicated in such a way as to dispel any impression that the trade mark owner is responsible for it; however, it is not necessary to indicate that the repackaging was carried out without the authorization of the trade mark owner; the presentation of the repackaged product is not such as to be liable to damage the reputation of the trade mark and of its owner; thus, the packaging must not be defective, of poor quality, or untidy69; and the importer gives notice to the trade mark owner before the repackaged product is put on sale, and, on demand, supplies him with a specimen of the repackaged product. In Paranova II70 the Court of Justice added that the repackaging must be objectively necessary to enable the importer to have access to them market. A third party dealing with parallel imports (including repairing them) may also infringe if they do something that perhaps tarnishes the goods and causes ‘mental impairment’.71 English courts have not been enthusiastic about the argument that poor quality repackaging can cause ‘mental impairment’ harm (as in Paranova I): Zino Davidoff SA v A&G Imports Ltd72 and Glaxo Group Ltd v Dowelhurst Ltd73. But a few years later, in Case C-143/00, Boehringer Ingelheim KG and others v Swingard Ltd and Dowelhurst Ltd (Boehringer I)74 the Court of Justice reaffirmed all the previous caselaw, and in Case C­348/04 Boehringer Ingelheim KG and others v Swingard Ltd and Dowelhurst Ltd (Boehringer II)75 it restated the applicable principles, so the English courts’ reluctance appears to be unjustified. Within the EEA, problems may arise when identical trade marks belong to different businesses in different Member States. In Case C-40/70, Sirena v Edo,76 the Court of Justice treated an assignment like a licence by assuming it had continuing effect (as, in a way, it does): so the original owner could not stop goods from Member State A where the trade mark had been assigned to a new owner could not be kept out of Country B where the trade mark remained in the hands of the original owner. The fact that the two owners were unconnected, and even that the assignment had been made many years earlier, changed nothing. As an aside, what might have seemed logical in a Community of Six might be very different in a Union of 28. The important matter to the Court was the common origin of the trade marks. This doctrine reached its zenith in Case C-192/73, Van Zuylen Frères v HAG AG (HAG I) 77 where the Court of Justice held that even an involuntary change in ownership did not overcome the fact that the marks had a common origin. In that case, the trade mark (for decaffeinated coffee) originated in Bremen in Germany in 1906 and was derived from the company name Kaffee Handels-Aktien-Gesellschaft, or Kaffee HAG for short. The company had subsdiaries in other countries, and at the end of the second world war the HAG trade mark in Belgium nd Luxembourg was expropriated as enemy property, coming into the ownership of Van Zuylen. The dispute arose when the German company started to export coffee to Luxembourg and Van Zuylen sued, unsuccessfully as it turned out, for infringement. In Case C-10/89, SA CNL-Sucal NV v HAG GF AG (HAG II)78 the Court of Justice reversed this position, and in Case C-9/93, IHT Internationale Heiztechnik GmbH v Ideal Standard79 it also reversed Sirena (which dealt with voluntary assignments): so now the trade mark can be enforced against the assignee. Where the use of the trade mark is licensed, however, the situation is different. The starting point is that imports from a licensee are made with the consent of the licensor (the trade mark owner). However, that consent might be treated as having been withdrawn if the licensee breaches the licence. In Case C-59/08, Copad SA v Christian Dior Couture SA80 the licensee had failed to observe quality control provions in the licence and the Court treated the consent as withdrawn. The decision reinforces the rôle of the trade mark as a guarantee of quality, shows how important are quality control provisions in a trade mark licence, and tells us that a licensee who commits a breach will not merely be in breach of contract but will also infringe. Because the marketing is without consent, Article 7(1) will not apply (the trade mark owner’s rights will not be exhausted) and because of the possibility of damage to the mark the owner may be able to oppose further commercialisation of the goods. Section 13 deals with disclaimers and limitations, giving authority for the Registrar to permit the registration of a mark subject to a disclaimer of a particular element or a limitation on its effects. It also deals with the circumstances in which this can occur, and sets out the consequences for the rights of the proprietor. The new Act reflects the provisions of sections 4(2) and 14 of the 1938 Act. Section 13 also replaces section 17(2) of the old Act, which dealt with conditions and limitations imposed by the Registrar. An applicant for registration of a mark, or the proprietor of a registered trade mark, may disclaim any right to the exclusive use of any specified element of the mark. This is likely to happen where there are doubts about the distinctiveness of an element of a mark: if either the applicant wishes to avoid the possibility of a dispute with a third party over the suitability of the mark for registration, or there is a threat of opposition proceedings or some other action against the mark, a disclaimer of the disputed element may be a way to resolve the problem. Under the 1938 Act, the Registrar was given powers to require a disclaimer of matter considered to be non-distinctive. This power is not re-enacted in the 1994 legislation. The section goes on to say that applicants may agree that their rights will be subject to specified territorial or other limitations. This will usually concern an area of the UK which the right covers, and overcome a conflict with an earlier right. This is a voluntary means for overcoming such conflicts, and ins agreed to by the parties rather than imposed by the Registrar. The 1938 Act gave the Registrar the authority to impose territorial limitations, permitting both marks involved in a conflict to be registered: but the Directive gives the proprietor of an earlier right the absolute right to prevent someone else from either using or registering a conflicting mark, so such limitations can only de accepted if voluntarily given. Where a registration is subject to a disclaimer or limitations, the rights of the proprietor are accordingly restricted. Disclaimers and limitations are entered on the register and published in the Trade Marks Journal. Section 21 of the Act makes threats of infringement proceedings actionable by anyone – not necessarily the recipient of the threats – who suffers damage as a result. However, if the threat is to sue for infringement consisting of manufacturing or importing goods, or supplying services, under the mark, no remedy is given. The purpose of the provision is two-fold: it obliges trade mark owners to expose their marks to the possibility of a counterclaim for revocation, rather than relying on the expense of defending a threatened action (which may be groundless) to deter the recipient from continuing to use the sign: and it protects smaller businesses – for example, retailers – rather than substantial manufacturing concerns that should be able to assess the merits of a threat. In Prince plc v Prince Sports Goods Inc81 the plaintiffs obtained a declaration and an injunction after being threatened by the defendants with proceedings for infringement arising out of their use for computer services of the prince.com domain name. The defendants’ threat was made to comply with the Domain Name Dispute Policy operated by Network Solutions Inc, which gave the registrant of the domain name the option of countering with their own legal proceedings – and section 21 was precisely what the plaintiffs needed. In L’Oréal (UK) Ltd v Johnson & Johnson82 the High Court considered that a letter which reserved the right to bring future trademark proceedings was reasonably understood to constitute a threat. The trademarks in issue were ‘Johnson’s No More Tears’ and ‘No More Tears’, which were registered by the first defendant for baby shampoos. The second defendant was the UK subsidiary of the first defendant, and its licensee. The claimant launched a range of children’s hair products in 1999 with the caption “NO TEARS” on the packaging and the defendants brought infringement proceedings in Ireland. The claimant’s English solicitors wrote to the first defendant asking for their confirmation that similar proceedings would not be brought in the UK, and the first defendant’s solicitors wrote back reserving their client’s right to sue. The claimants then took proceedings under Section 21 also seeking a declaration of non-infringement. The claim was struck out by Master Bragg on the grounds that there was no threat and there were insufficient grounds for seeking a declaration, and the claimant appealed to the High Court which allowed the appeal. Even though the letter disclaimed any threat, the court considered that it constituted one, and that it went further than merely reserving the defendant’s rights. In fact the letter went on to state that the defendants had not decided whether or not to sue, that others had desisted from using the words “no tears” on their packaging, that the defendants had six years in which to commence proceedings, and that they would give no comfort as far as the possibility of proceedings was concerned. Evidence was brought that the letter was reasonably read and understood by the claimant to be a warning of possible future proceedings, perhaps dependent on the outcome of the Irish action. The judge, Lightman J, held that when someone in the defendant’s position writes ‘a letter designed to be close to the line between what was and what was not a threat or adverse claim, he should not be surprised if the court held that it was at least arguable that there was a threat or adverse claim.’ 1The preamble to the Directive mentions the origin function of a trade mark: trade mark use is therefore taken to involve use so as to indicate origin. Article 5 of the Directive leaves non-trade mark uses for the laws of Member States to deal with. 2[1996] FSR 205. 3[1997] FSR 211. 4In Mars v Cadbury [1987] RPC 387 the defendants’ use of the description ‘treat-sized WHISPA bars’ did not infringe the claimant’s TREETS trade mark because it was descriptive, not origin-indicating. 5Case C-206/01, Arsenal FC v Matthew Reed [2002] ECR I-10273. 6Case C-17/06, Céline SARL v Céline SA [2007] ECR I-7041, and for an application of this case in the English courts see RxWorks Ltd v Hunter (t/a Connect Computers) [2007] EWHC 3061 (Ch)[2008] RPC 303 (20 December 2007) (Daniel Alexander QC sitting as a deputy High Court judge). 7[2003] ECR II-1677. 8The reference to services being ‘manufactured’ appears to be one of those nonsenses that too often emanate from the EU. 9[2004] EWHC 1498 (Ch) (29 June 2004) (Geoffrey Hobbs QC sitting as a deputy judge). 10[1995] RPC 117. 11This confused state of affairs was commented on in RxWorks. While compound prepositions are usually best avoided, using three times as many words as are generally needed, this might be one of those instances when there is a good reason for verbosity. ‘For’ is an awkward word to use in the context: a trade mark is surely used ‘on’ goods, but cannot be used ‘on’ services (no more than services can be ‘manufactured’), so a compound preposition – either of those quoted seems to be up to the job – is probably called for. 12Beaumatic International v Mitchell International Pharmaceuticals [2000] FSR 267. 13[2007] ECR I-1017. 14[xxxx] ECR I- 15[2011] EWHC 244 (Pat) [2011] RPC 17. 16On this point, the judge said ‘see in particular Case C-206/01 Arsenal Football plc v Reed [2002] ECR I-10273 at [51], Case C-245/02 Anheuser-Busch Inc v Budejovicky Budvar np [2004] I-10989 at [59], Case C-48/05 Adam Opel AG v Autec AG [2007] ECR I-1017 at [18]-[22] and Case C-17/06 Céline SARL v Céline SA [2007] ECR I-7041 at [16].’ 17[2010] EWHC 2599 (Ch). See the IPKat’s comment on that judgment at http://ipkitten.blogspot.co.uk/2010/10/sudden-outbreak-of-common-sense-initial.html. 18Specsavers International Healthcare Ltd & Ors v Asda Stores Ltd [2012] EWCA Civ 24 (31 January 2012). 19[2012] EWHC 1929 paragraph 78. 20[2009] ECR I-09429. 21Case C-281/05, Montex Holdings v Diesel [2006] ECR I-10881. 22See Autodrome TM [1969] RPC 564. 23[2008] EWHC 361 (Ch), [2008] ETMR 33. See www.mrspicy.co.uk. 24 25[2010] ECR I-06963. 26[1998] FSR 92. 27[2005] ECR I-8735. 28[2008] FSR 313. 29LA Gear v Hi-Tech Sports [1992] FSR 121, confirmed in Vermaat & Powell v Boncrest (No 2) [2002] FSR 331. 30Euromarket Design Inc. v Crate & Barrel Ltd [2001] FSR 288. 31[1986] FSR 45. 32[1989] FSR 126. 33[1993] RPC 32. 34Section 4(1)(b) of the 1938 achieved considerable notoriety when in Bismag Ltd v Amblins Chemists Ltd [1940] Ch 6670 Mackinnon LJ’s commented: In the course of three days hearing of this case I have, I suppose, heard section 4 of the Act of 1938 read, or have read it for myself, dozens if not hundreds of times. Despite this iteration I must confess that, reading it through once again, I have very little notion of what the section is intended to convey, and particularly the sentence of two hundred and fifty-three words, as I make them, which constitutes sub-section 1. I doubt if the entire statute book could be successfully searched for a sentence of equal length which is of more fuliginous obscurity. This is why trade mark lawyers are the only people who know what ‘fuliginous’ means – it is derived from the Latin word for ‘soot’. 35[1996] RPC 357. 36[1997] FSR 34. 37Unreported, 18 December 1996. 38[2001] FSR 541. 39Directive 97/55/EC, of the European Parliament and of the Council of 6 October 1997 amending Directive 84/450/EEC concering misleading advertising so as to include comparative advertising, [1997] OJ L290/18, now consolidated as Directive 2006/114/EC of the European Parliament and the Council of 12 December 2006 [2006] OJ L376/21, implemented by the Control of Misleading Advertising Regulations 2000, SI no 914. The Regulations provide for control by the Director General of Fair Trading, but the criteria by which such advertisements are judged to be misleading are likely to influence the court in trade mark cases. 40[2008] ECR I-4231. Note the name of the defendant, which is often mis-spelled ‘Hutchinson’. 41[1996] FSR 473. 42[1996] FSR 431. 43[1998] FSR 500 (CA). 44[1999] ECR I-905. 45[2004] ECR I-691. 46[2005] ECR I-2337. 47See IBM Corporation v Web-Sphere Ltd [2004] FSR 796 (where the defence failed, because the defendant had changed its name shortly after the claimant launched its product, to take advantage of its success), and contrast Reed Executive plc v Reed Business Information Ltd [2004] RPC 767 (where the defence succeeded). 48Supra., note 43. 49[2010] EWCA 110. 50[1997] FSR 864. 51[2002] ECR I-4187. 52Supra., note 44. 53[1999] All ER (D) 478. 54Case C-228/03, Gillette, supra., note 46. 55[2010] ECR I-06963. 56Chelsea Man Menswear Ltd v Chelsea Girl Ltd [1987] RPC 189. 57[2004] ECR I-11313. 58Class International, note 27, supra. 59Case C-127/09, Coty Prestige Lancaster Group GmbH v Simex Trading AG [2010] ECR I- 04965. The goods in question were ‘perfume testers’, a rather special case which means that this precedent is not likely to help many trade mark owners. 60Silhouette International Schmied GmbH & Co KG v Hartlauer Handelsgessellschaft mbH, case C-355/96, [1998] The Times 2 July (Court of Justice). 61[1999] ECR I-4103. 62Peak. 63[1999] 2 CMLR 1056. 64 65Case C-3/78, Centrafarm v American Home Products [1978] ECR 1823. 66Case C-379/97, Pharmacia & Upjohn SA v Paranova A/S (Paranova II) [1999] ECR I-6927. 67[1997] ECR I-6227. 68Case C-427/93, Bristol-Myers Squibb v Paranova A/S, Case C-429/93 C. H. Boehringer Sohn, Boehringer Ingelheim KG and Boehringer Ingelheim A/S v Paranova A/S and Case C-436/93, Bayer Aktiengesellschaft and Bayer Danmark A/S v Paranova A/S [1996] ECR I-3457. See also Joined Cases C-71/94, C-72/94 and C-73/94, Eurim-Pharm Artztnimiittel v Beiersdorf AG [1996] ECR I-3603 and Case C-232/94, MPA Pharma v Rhône-Poulenc (Paranova I) [1996] ECR I-03671 69This has been referred to, with little regard to semantics, as ‘mental impairment’, in distinction to ‘physical impairment’ mentioned above under ‘Repackaging’. 70Note 66, supra. 71Case C-337/95 Perfums Christian Dior v Evora BV [1997] ECR I-6013. 72[1999] 2 CMLR 1056. 73[2000] 2 CMLR 571. 74[2002] ECR I-03759. 75[2007] ECR I-03391. 76[1971] ECR 69. 77[1974] ECR 731. 78[1990] ECR I-3711. 79[1994] ECR I-2789. 80 81[1998] FSR 21. 82[2000] ETMR 691, [2000] FSR 686.
    1. 1.1 Introduction
      1. 1.1.1 Extent
      2. 1.1.2 Commencement
    2. 1.2 INFRINGEMENT
      1. 1.2.1 Chatty introduction
      2. 1.2.2 Infringement in law
      3. 1.2.3 Look-alike products
    3. 1.3 ‘Use’
      1. 1.3.1 Keyword advertising
      2. 1.3.2 Importing and exporting
      3. 1.3.3 Business papers
      4. 1.3.4 Secondary infringement: Liability of Printers, etc. (section 10(5))
      5. 1.3.5 Non-visual use
      6. 1.3.6 Use within the UK
    4. 1.4 Defences and Permitted Use
      1. 1.4.1 Introduction
      2. 1.4.2 General
      3. 1.4.3 Comparative advertising
      4. 1.4.4 Using a registered trade mark
      5. 1.4.5 Nominative use and honest practices
      6. 1.4.6 Earlier rights
      7. 1.4.7 Acquiesecence
      8. 1.4.8 Exhaustion
      9. 1.4.9 Disclaimers and limitations
      10. 1.4.10 Groundless threats

Introduction

Trade marks have little in common with other types of intellectual property, but one thing they do share is that they confer exclusive rights on the owner. These rights are by no means a monopoly, as they are normally limited to specific goods or services and those lying just outside the periphery. Trade mark rights do not enable the owner to prevent another person using their trade mark in all possible ways, as a patent or registered design does, or to prevent copying, as does copyright. The area in which the exclusive rights operate is narrowly drawn, mainly by reference to the goods or services for which the trade mark is registered, which is consistent with the idea of a trade mark as a component of a business’s goodwill. Copyright and design laws may also protect subject-matter that looks the same as a trade mark, but they are concerned not with the trade mark itself as a symbol of business goodwill, but with a work or design that happens to function as a trade mark

Extent

The owner of a registered trade mark has the exclusive right to the mark: note that this is not the exclusive right to use the mark, which is what the 1938 Act provided for, although section 9(1) of the Act does say that the owner’s exclusive rights are infringed by use in the UK without consent. Section 10 sets out the sorts of acts which are infringements, while section 11 (plus section 10(6)) provides for exceptions to protection.

The directive says nothing about use of a trade mark other than to define infringing use. There is no express need for a commercial connection, or what is known as ‘trade mark use.’1 In the debates on the bill, the government said that the requirement for trade mark use is inherent in the wording of the section, which seemed at the time to be common sense. This meant that, unless there was some sort of trading activity, use as an Internet domain name (not something that bothered people in 1994) probably would not infringe. But since the 1994 Act, and the Community Trade Mark Regulation, came into operation, common sense seems to have played a smaller and smaller part in trade mark law, and the notion of what constitutes trade mark use has expanded considerably, as we will see.

Commencement

The proprietor’s rights have effect from the date of registration. Section 40(3) provides that this will be the date of filing the application: and the date of filing may, in the case of an application claiming priority under the Paris Convention from an earlier filing overseas, be the priority date.

Infringement proceedings may not be brought until the mark has been registered. Up to that point, there is no right to be infringed. However, the date from which the mark becomes operational from the point of view of the criminal provisions of the legislation is earlier: proceedings may be brought under section 92 if the application has been published. These provisions respectively re-enact the present position regarding infringement proceedings, and follow the general principle in criminal law that penalties should not be imposed with retrospective effect.

INFRINGEMENT

For there to be an infringement, two elements must be present. First, there must be an act of infringement within the meaning of the Act, and second, it must be within the scope of protection enjoyed by a registered trade mark. Section 11 (and section 10(6)) provides statutory defences, and a defendant may also raise other defences to show that no infringement has taken place. It also has the possibility of challenging the claimant’s trade mark – either arguing that it is invalid (and should never have been registered) or it should be revoked. Counterclaims alleging invalidity or seeking revocation are common in trade mark claims: so too are back-up passing-off claims, because they can survive a challenge to the trade mark registration and give the claimant a second chance of success.

Chatty introduction

Section 9(1) tells us that the proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in the UK without his consent. This has been described by Jacob J (in British Sugar) as ‘really no more than a chatty introduction to the details set out in section 10, itself adding no more than that the acts must be done without consent.’ But note that the section gives exclusive rights in the trade mark – not exclusive rights to use it: so does use have to be trade mark use (to indicate a connection in the course of trade between the goods and the proprietor or registered user of the trade mark) or is the concept of infringement wider?

  • In British Sugar, Jacob J seemed to reject any such restriction, hold use in relation to the goods sufficient. Section 10 speaks neutrally of use of a sign: this suggests that trade mark use is not necessary.

  • The other view was taken in Bravado Merchandising Ltd v Mainstream Publishing Ltd2 although it was held that the use of the name Wet Wet Wet in the title of a book about the band was use in a trade mark sense, though not trade mark use. It identified the book’s subject matter, but not as an indication of origin. However, this appears to apply a gloss to the statutory wording which Jacob J’s approach does not: the latter should therefore be preferred.

  • Finally, in Trebor Bassett Ltd v The Football Association3 Rattee J rejected the claim of infringement as the mark (the three lions logo used by the England football team) was not used in relation to the relevant goods. In British Sugar Jacob J observed that the Wet Wet Wet trade mark was not registered for books: perhaps this provides a rationale for these decisions.

The fact that (as Jacob J noted in British Sugar) section 10 (like Article 5 of the Directive) uses the neutral word ‘sign’ while section 9(1) uses ‘trade mark’ confuses the matter no end. Under the old law, trade mark use – use to indicate origin – was an essential component of an infringement,4 and the Court of Justice says that use of a sign in commerce is not all that is required (making British Sugar wrong). But what constitutes an infringement is still a great deal wider than it was under the old law: in stating that there must be a use which affects the essential function of the trade mark5 the Court has made it possible for trade mark owners to stop anyone seeking to take unfair advantage of the status and repute of the trade mark. So there is still a requirement for trade mark use, but it is much broader than previously.

The Arsenal decision tells us that the law now protects the wider function of a trade mark as a vehicle for ‘creating and retaining custom’. The Court referred to its earlier jurisprudence (dating back to the old parallel importation cases of the seventies and eighties) on what is the essential function of a trade mark, and the trade mark’s role guaranteeing commercial origin and quality. It emphasised the important role played by trade marks in promoting competition in the internal market, and said that the exclusive rights conferred on trade mark owners are to enable their specific interests to be protected. Allowing a third party to use the sign would be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing the origin of the goods. Subsequent cases, as we shall see, have built on this foundation, proposing new functions for trade marks almost on a case-by-case basis.

The Court has helpfully provided a summary of the definitive requirements for liability for infringement, expressed in four conditions:

  • The use complained of must be in the course of trade.

  • It must be without the consent of the trade mark owner.

  • It must be in respect of goods or services.

  • It must affect, or be liable to affect, the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services.6

Use in the course of trade

The General Court elaborated on the first of these requirements in Case T-195/00, Travelex Global and Financial Services Ltd v Commission7 – an unusual case in which the trade mark owner challenged not another trade mark but the adoption of the € symbol. The Court (relying on Arsenal) dismissed the claim of trade mark infringement, saying that the Commission’s use of the symbol was not ‘use in the course of a commercial activity whereby goods or services are manufactured and supplied in a particular market.’8 In Electrocoin Automatics Ltd v Coinworld Ltd 9 the High Court held that just because a gaming machine displayed the characters OXO did not mean that the claimant’s OXO trade mark had been infringed, as the use was not in the course of trade. In RxWorks the court suggested that use ‘in the course of trade’ required use ‘in the course of a commercial activity with a view to gain and not as a private matter’, which seems to approach the matter from a different direction.

Without consent

The defendant in an infringement action may be able to argue that what it did was done with the trade mark owner’s consent. It sounds strange, because surely the owner would know what it had consented to, but it worked in Northern & Shell v Condé Nast10 where both parties held licences to publish magazines under the title PENTHOUSE, and Jacob J held that both were using the mark with consent.

‘In respect of goods and services’

The Directive uses the simple preposition ‘for’ when it talks of use and goods or services, whereas the Trade Marks Act, in a demonstration of the prolixity commonly associated with lawyers, prefers the compound preposition ‘in relation to’. The Court of Justice, neutrally, has gone for ‘in respect of’.11 The Trebor Bassett case shows us what is not ‘in relation to’ goods or services, where the incidental use of the England football team’s ‘three lions’ symbol was not use in relation to the sweets with which the cards depicting members of the team were distributed.

Where a mark is used by a customer ordering goods from the alleged defendant, but not by the defendant itself, there is no use ‘in relation to’ the goods. Use on invoices, on the other hand, is use ‘in relation to’ the goods.12

The key to understanding the difference lies, as does so much of the law in this area, in the Arsenal decision of the Court of Justice. There, the Court said that the national court should consider why the defendant used the trade mark: was it to help the defendant sell its goods or services? This sheds light on the meaning of ‘in relation to’ (or ‘in respect of’), and also indicates that misappropriation rather than indication of origin is at the heart of trade mark protection.

Consumer perception

The average consumer, whom we have already encountered in trade mark law, makes an appearance again in the fourth condition of the Céline test. Whether the use of the mark is trade mark use has to be viewed through the average consumer’s eyes. In Case C-48/05, Adam Opel AG v Autec13 it was whether the consumer would perceive the mark as indicating that the defendant’s toy cars were made by the claimant, or whether the mark was simply part of the authentic appearance of the goods. The more important the consumer considered the fidelity of the model, the less the use would undermine the trade mark’s function. Contrast this with Arsenal, where (on the facts, of course: the case is notable for the fact that Laddie J, having referred questions to the Court of Justice, took the view that the judges in Luxembourg had disagreed with his findings of fact and therefore exceeded their jurisdiction; applying the Court of Justice’s answers to the facts as he had found them, he decided that the Court had actually supported his view, and held that there was no infringement because the defendant’s products indicated allegiance to Arsenal rather than trade origin, but the Court of Appeal thought otherwise) the consumer’s perception was that the club had guaranteed the origin of the merchandise. The Court of Appeal (Aldous LJ) observed that, to the average consumer, a badge could serve to indicate both origin and allegiance.

Where the alleged infringement is under section 10(3) (dilution), the important question is whether the defendant’s use of the sign produces an association in the mind of the average consumer. In Case C-xxx/xx, Adidas-Salomon AG and Adidas Benelux BV v Fitnessworld Trading Ltd14, the Court of Justice said that just because a sign (in suit, the three stripes which forms an important part of Adidas’s get-up) be viewed by the relevant section of the public as an embellishment did not mean that the defendant’s use of a similar sign would not infringe. The question was whether the degree of similarity was such that the relevant section of the public established a link between the sign and the mark. In the right circumstances, even decorative use of a figurative mark might infringe.

Infringement in law

Section 10 contains the details of what constitutes an infringement. It implements Article 5 of the Directive, and replaces the old Act’s sections 4 and 5. The rights granted are much wider than under the 1938 Act: infringement is no longer restricted to use on the goods or services for which the mark is registered, but covers similar goods and services and in some cases (perhaps very rare) dissimilar goods or services.

Identical mark, identical goods

The first situation is where there is unauthorised use of a mark identical to the registered mark on goods or services for which that mark is registered. This was an infringement under the 1938 Act, and will be an infringement under the 1994 Act.

There is no question of having to show that confusion is caused by this use: because of the identity of the marks and of the goods or services, confusion is considered inevitable and need not be demonstrated.

In Datacard v Eagle15 Arnold J said six conditions are required to establish a case of ‘double identity infringement’:

The case law of the Court of Justice of the European Union establishes that the proprietor of a registered trade mark can only succeed in a claim under Article 5(1)(a) of the Directive if six conditions are satisfied: (i) there must be use of a sign by a third party; (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 identical to the trade mark; (v) it must be in relation to goods or services which are identical to those for which the trade mark is registered; and (vi) it must affect or be liable to affect the functions of the trade mark ...16

Similar marks, similar goods and services, likelihood of confusion

Section 10(2) describes two situations where due to similarities between either the marks or the goods or services unauthorised use of a mark may infringe. The first is where an identical mark is used on goods or services similar to those for which the mark is registered: the second is where a similar mark is used on similar goods or services.

In these cases, the law does not assume that confusion will inevitably result. It requires that the proprietor of the mark shows that the public is likely to be confused by the junior use.

This expressly includes the situation where there is a likelihood of association between the registered mark and the other sign. This covers the impression of association that two signs, though they can be distinguished visually, may produce in the consumer’s mind.

This, then, extends the rights of the proprietor: previously it was only possible to take action for infringement if the goods or services on which the infringing mark was used were within the specification of the senior mark. It also has the consequence that the Registry will take a somewhat different view of overly-broad specifications when applications are examined. The need to cover a wide range of goods is reduced by the possibility of suing for use on goods or services which are merely similar, so the Registry is likely to be less prepared to allow wide specifications.

Initial interest confusion

In the United States, the courts have recognised that confusion may arise but then be resolved, but that harm may still be done. The consumer, having become interested in the defendant’s goods or services because the defendant used an infringing sign, may continue to do business with them even after realising that the defendant is not the party they thought they were. Whether there is a doctrine of initial interest confusion in English law is debatable. In Och-Ziff Management Europe Ltd & Anor v Och Capital LLP & Anor 17Arnold J said that there is. In Specsavers18 Kitchin LJ was reluctant to put the expression into general circulation:

86 It is not entirely clear to me what Arnold J and the parties had in mind by the phrase ‘circumstances prior to, simultaneous with and subsequent to the use of the sign’ but it must, I think, be seen in light of the particular and rather specific issue in that case, namely whether Article 9(1)(b) extended to confusion arising from use of the sign in advertising and promotional materials, so called ‘initial interest confusion’, whether or not any sale resulted and whether or not the consumer remained confused at the time of any such sale. The judge held that initial interest confusion was actionable. At least in the circumstances of that case, it mattered not that it was dispelled at a later time.
87 In my judgment the general position is now clear. In assessing the likelihood of confusion arising from the use of a sign the court must consider the matter from the perspective of the average consumer of the goods or services in question and must take into account all the circumstances of that use that are likely to operate in that average consumer's mind in considering the sign and the impression it is likely to make on him. The sign is not to be considered stripped of its context.

The differing approach from Arnold J (see Red Bull v Sun Marks 19) appears to be theoretical rather than actual. The question of confusion must be considered from the perspective of the average consumer of the goods or services in question and must take into account all the circumstances.

Dilution

Article 5(2) of the directive (corresponding to Article 9(1)(c) CTMR) permits Member States to include a third form of infringement. It covers the unauthorised use of a sign which is identical or similar to a registered trade mark on goods or services which are not similar to those for which the mark is registered. Section 10(3) contains this provision, which parallels that in section 5(3) which deals with relative grounds for refusal of registration.

Action may not be taken against this sort of use in every case. The Act sets threshold conditions: the mark must be one which has a reputation, and the use must without due cause take unfair advantage of or be detrimental to the distinctive character or the reputation of the mark.

There is therefore no need for the goods on which the second mark is used to be in direct competition with the registered mark. The proprietor’s sales do not even have to be damaged.

Article 9(1)(c) of the Community Trade Marks Regulation gives this extended form of protection to Community trade marks with a reputation in the Community. Does this mean a reputation throughout the Community, or will a reputation in part only of the Community suffice? If a mark has a reputation in part only of the Community, will the owner be able to stop dilution in that part only? These questions were raised in Case C-301/07, PAGO International GmbH v Tirolmilch registrierte Genossenschaft mbH,20 where the Court said:

a Community trade mark must be known by a significant part of the public concerned by the products or services covered by that trade mark, in a substantial part of the territory of the Community, and that, in view of the facts of the main proceedings, the territory of the Member State in question may be considered to constitute a substantial part of the territory of the Community.

Look-alike products

The problem of look-alike products became significant shortly before the passage of the new law. Despite energetic lobbying, brand owners were unable to obtain an amendment to the Act to protect their position. They are left with the extended scope of registration under the new Act and the law of passing off.

‘Use’

Section 10(4) tells us what the Act means when it refers to use of a trade mark, amounting to infringements if done without authority. The list in the subsection is not exhaustive. It includes:

  • affixing a mark to goods or their packaging;

  • offering or exposing goods for sale, putting them on the market or stocking them under the sign, or offering or supplying services under the sign;

  • importing or exporting goods under the sign; and

  • using the sign on business papers or advertising.

The wording is largely taken from Article 5 of the Directive, though the words ‘or exposing’ do not appear there. English law gives a restricted meaning to ‘offering the goods’, implying an actual offer: using the words of the Directive might not therefore catch merely displaying (or ‘exposing’) the goods in a shop window, for example. The Court of Justice has indicated that the goods must have been placed on the market.21

The wording used in the Act is also designed to catch the situation where a trader adopts the name of another as the name of a shop, selling the goods for which the mark is registered. Under the 1938 Act the infringing user could have argued that this was not ‘use’ since it was not use upon or in physical relation to the goods.22

Keyword advertising

The development of keyword advertising on the World Wide Web has raised novel problems of trade mark infringement. The idea is that the advertiser pays a search engine provider to ensure that when a user of the search service types in the keyword the search engine displays a sponsored link in a prominent position among the results. If the advertiser has paid for a keyword which coincides with its own name or trade mark, of course, that raises no problems, but crafty advertisers bought keywords that coincided with their competitors’ trade marks, leading to distorted search results.

Although the best-known (to the courts as well as to the public) keyword advertising system if Google’s ‘Adwords’, the earliest case before the English courts is Wilson v Yahoo! Ltd 23, which was dismissed summarily as disclosing no arguable cause of action. In Joined Cases C-236/08 to C-238/08, Google France v Louis Vuitton,24 the Court of Justice held that allowing businesses to bid for Adwords was not using trade marks in the course of trade, it only created the technical conditions necessary for advertisers to use the marks. But while Google were not infringing, the same was certainly not true of advertisers. The display of the sponsored link was liable to create the impression that there was a material material link between the advertiser’s goods or services and the owner of the trade mark. The trade mark’s ability to distinguish one party’s goods or services from those of the other would be undermined, so there would be infringement, although the national courts would have to decide in each case whether the distinguishing function had in fact been, or was likely to be, affected.

Where the defendant is selling second-hand goods, it is likely that using a keyword that corresponds to the trade mark of a manufacturer of those goods will automatically be applied to goods made by others. Such was the case in Case C-558/08, Portakabin Ltd v Primakabin BV25 where the defendant dealt in temporary buildings, not all of which were made by the claimant. The Court of Justice, with typical prolixity, said:

Article 5(1) [of the Directive] ... must be interpreted as meaning that a trade mark proprietor is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with, or similar to, that mark, which that advertiser has selected for an internet referencing service without the consent of the proprietor, in relation to goods or services identical to those in respect of which the mark is registered, where that advertising does not enable average internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or from an undertaking economically linked to it or, on the contrary, originate from a third party.

Interesting points arise about the defences available under Article 6 (section 11(2) of the Act) and Article 7 (section 12), which are discussed below, paragraphs and .

Importing and exporting

Importing and exporting goods under the sign is also ‘use’ for the purposes of the Act. Section 31 of the old Act covered exporting: whatever would be use of the trade mark if done with goods or services supplied in the UK will be an infringement if the goods or services to which the mark is applied in the UK are to be supplied abroad.

Importing infringing goods infringes the proprietor’s rights even before the goods are placed on the market. Action can therefore be taken immediately the goods enter the country. Customs and Excise may also be given notice to treat goods bearing infringing trade marks as prohibited goods (section 89 and EC Council Regulation 3842/86).

Even if the goods are imported and immediately re-exported, an infringement may take place: Waterford Wedgwood plc v David Nagli Ltd.26 But in Diesel and in Case C-405/03, Class International BV v Colgate Palmolive 27 it was held that placing goods in a transit warehouse did not mean that they had entered the EU or been placed on the market. The Court of Appeal in Eli Lilley & Co v 8PM Chemist 28 held that the trade mark owner could not object to goods in transit. In Class, the goods were in transit between two non-EU countries and in Diesel to a Member State where there was no protection.

Business papers

Use of a trade mark on business papers or advertising material is also caught by the Act. This provision is aimed at use of the mark to describe the goods of the person using the mark, not in comparative advertising (where the mark is used to identify the proprietor’s goods), a situation covered by section 10(6).

Secondary infringement: Liability of Printers, etc. (section 10(5))

Anyone applying a registered trade mark to labelling or packaging materials, business papers or advertisements for goods or services may be treated as a party to any use of the material which infringes the rights of the proprietor. There is a requirement here that at the time of applying the mark the printer, etc., knew or had reason to believe that the application of the mark was not authorised by the owner of the mark or a licensee. The test is objective, and examines the defendant’s behaviour against the standard of a reasonable person in that line of business.29

This provision is aimed at printers and others who print or otherwise deal in labels or packaging bearing a trade mark with the intention that they be used on infringing goods.

Non-visual use

The 1938 Act took a narrow view of what could be an infringing use. It required that such use be a visual representation of the mark: spoken use, in a television advertisement or by a seller, was not an infringement.

Now, non-visual use of a trade mark is included within the definition of ‘use’ in section 103.

Use within the UK

The infringing conduct must take place within the UK. What about an advertisement on a website stored on servers in another jurisdiction? The claimant will have to show that it was aimed at customers in the UK, and that those customers can order goods and pay in sterling.30

Defences and Permitted Use

Introduction

As with other types of intellectual property, trade mark law derogates from the protection it gives by permitting certain acts that would otherwise be infringements. Most of these are found in section 11, although section 10(6) also deals with a situation in which using someone else’s trade mark is permitted. But before we consider the statutory defences available under the Trade Marks Act, we must look at what a defendant may do to defeat a claim of infringement by showing that what it is doing simply does not fall within the definition of an infringement.

General

What constitutes an infringement is carefully defined in the legislation, so there is considerable scope for an accused infringer to argue that the law does not regard his activity as an infringement. These matters have already been covered above: it is open to the defendant to contend that what it is doing has the trade mark owner’s consent (see paragraph ), and that it is not trade mark use (see section ).

Comparative advertising

Comparative advertising may be ‘brand-neutral’ (simply stating that the advertiser’s goods or services are superior to, or cheaper than, unnamed others on the market) but it often involves use of the proprietor’s mark to identify proprietor’s goods for the purposes of comparison. When the other party’s trade mark is mentioned, it may amount to infringement. Comparative advertising may also be actionable for passing off (on which see MacDonalds v Burger King31).

Comparative advertising takes a number of forms, ranging from price comparisons to ‘knocking copy’ (News Group Newspapers Ltd v Mirror Group Newspapers (1986) Ltd32) and advertisements which describe goods by referring to their similarities with other manufacturers’ goods (Chanel Ltd v Triton Packaging Ltd33).

Comparative advertising is covered by Article 5(5) of the Directive, which states:

[Article 5] shall not affect any provision in any Member State relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services, where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark.

The government considered that this entitled the UK to provide that comparative advertising should be an infringement, changing the law from the 1938 Act.34 Nevertheless, the fact is that Article 5(1) and (2) make no mention of comparative advertising as a form of infringement, though on the other hand they could be considered to come within the definition of infringement without having to be mentioned expressly.

Section 10(6) provides that the use of a registered trade mark to identify goods or services as those of the proprietor or licensee will never be an infringement. However, any such use must be ‘in accordance with’ honest use in industrial or commercial practices: this wording is taken from Article 10 bis of the Paris Convention, where it is intended to define what amounts to fair competition. If it is not, it is treated as being an infringement if it also meets a second condition, that without due cause it takes unfair advantage of the distinctive character or repute of the mark. This wording was adopted from Article 5(3), the provision of the Directive that deals with dilution.

The first leg of this two-part proviso is an addition to the provision of the Directive. It is also difficult to predict how it will be applied: will it be industry-specific, in which case its application in, for example, the motor industry will be different from that in other sectors?

There have been several cases on comparative advertising under the new law. In Barclays Bank plc v RBS Advanta35 Laddie, J. (who was highly critical of the wording of Section 10(6)) held that it was not necessary to present the reader of advertising material with all the information about a competitor’s product, whether favourable or unfavourable to the comparative advertiser. The proviso has also been considered in Vodaphone Group plc v Orange Personal Communications36 and BT v AT&T Communications.37 The test is an objective one: would a reasonable reader be likely to say, on being given the full facts, that the advertisement is not honest? Codes of conduct are of no assistance in judging the reaction of the public: but the public are considered to expect hyperbole in advertisements. The words ‘takes unfair advantage of’ add, in Laddie J’s view, nothing.

In British Airways v Ryanair 38 Jacob J remarked that, despite the fact that it was clearly designed to permit comparative advertising, the drafting of section 10(6) left something to be desired. He said that, provided the use of the competitor’s mark was honest, there was nothing wrong in telling the public about the relative merits of the parties’ goods or services. The advertisement complained of had to be judged through the eyes of the relevant public, and words would bear their natural meaning: members of the relevant public were deemed to be familiar with hype. Minute textual analysis of the advertisement was not appropriate, as this was not how members of the public would read the advertisement. The purpose of the Act was not to impose a more puritanical standard than the general public would expect. In that case, BA’s claims were dismissed, in some instances surprisingly, but it is a prime example of how the way a case is presented can have a major impact on the development of the law. According to an article at the time in the journal Commercial Lawyer, the claimants came to court with a distinct lack of witnesses to support their claims.

The issue of comparative advertising is also addressed by the directive on misleading advertising39 which prohibits use of trade marks in comparative advertising except where necessary to identify the compared goods or services, provided the comparison does not extend to the competitor’s person or circumstances and where justification can be produced.

This is intended expressly to permit comparative advertising in certain circumstances:

  • the advertisements must not be misleading;

  • they must compare goods or services that meet the same needs or are intended for the same purpose;

  • they must be objective and compare only material, relevant, verifiable and representative features of goods or services, which may include price;

  • there must be no confusion between the goods of the advertiser and those of the competitor;

  • the advertisements must not ‘discredit denigrate or bring contempt on a competitor or his trade marks ... or capitalise on the value of a trade mark ... of a competitor’; and

  • the advertisements must not take unfair advantage of the reputation of a trade mark.

These limitations were already imposed by the British Code of Advertising Practice. It would be inconsistent with the directive to make all comparative advertising an infringement, so section 10(6) was designed to meet the requirements of that directive. This explains its departure form the wording of the trade marks directive: if it had stuck to the provisions of Article 5(5), it would have had the result of prohibiting all comparative advertising, as in the Benelux, subject only to the interpretation placed by the courts on the words ‘without due cause’. These will probably be taken to require necessity or prior right, and the exception would be extremely narrow.

The Court of Justice considered how the comparative advertising directive and the trade marks directive worked together, in Case C-533/06, O2 Holdings Ltd v Hutchison 3G Ltd40. Taken together, they create a comparative advertising defence to a trade mark infringement claim.

Using a registered trade mark

Section 11 begins by telling us that a registered trade mark is not infringed by the use of another registered trade mark on goods or services for which it (the second mark) is registered. This situation would not have arisen very often in the pre-2006 regime, since the point of the pre-grant search and subsequent refusal of registration was to avoid such conflicts arising: however, as the onus is now on the owner of earlier rights to oppose the application, it is much more likely to happen. If the situation is encountered, it would probably be one in which an action for a declaration of invalidity of the registration would be appropriate.

Section 11(1) provides that it is not an infringement of a trade mark to use one’s own registered trade mark. In theory, the junior trade mark only became registered because there was no conflict with the senior one: so how can a conflict arise after registration? Certainly, the better (one might think the proper) course would be to seek a declaration of invalidity (or, in the parlance of the European Community trade mark system, cancellation). However, in a CTM case, Case C-561/11 Fédération Cynologique Internationale v Federación Canina Internacional de Perros de Pura Raza, a reference from the Juzgado de lo Mercantil No 1 de Alicante (sitting as Community Trade Mark Court No 1), the Court of Justice held ‘that the exclusive right of the proprietor of a Community trade mark to prohibit all third parties from using, in the course of trade, signs identical with or similar to its trade mark extends to a third-party proprietor of a later registered Community trade mark, without the need for that latter mark to have been declared invalid beforehand.’ But section 11(1) is a home-grown provision, not one based on a provision of the Directive, so while that case is instructive it does not bear directly on the section.

There are time limits on when an action for a declaration of invalidity can be brought. It would not be right for a registration to remain vulnerable for ever – there has to be a point at which the owner can be certain that the trade mark will not face an invalidity claim. This means that there might be circumstances in which the defendant is unable to knock out the claimant’s registration, so section 11(1) has an important though infrequent role to play.

The junior mark must have been used in the form in which it was registered. This too reflects to need for legal certainty. In Neutrogena v Golden Ltd t/a Laborotoires Garnier 41 the defendant’s registered trade mark was NUTRALIA, but in use it had been rendered NEUTRALIA. A small difference, but sufficient (according to Jacob J) to create different imagery in the mind of the consumer and deny them the ability to rely on the defence.

Nominative use and honest practices

Although the expression does not appear in the legislation (it is American in origin), ‘nominative fair use’ neatly encapsulates the next three exceptions to copyright protection. Nominative, because the sign is used as a name; fair use, because the legislation requires that it be used according to honest practices in industrial and commercial matters (an extremely important proviso). If this proviso is met in the listed situations, it will not infringe rights in registered trade marks.

The ‘honest use’ test is an objective one, taking into account all the surrounding circumstances including the defendant’s motive: see The European Ltd v Economist Newspapers Ltd42 and Scandecor Devel0opment AB v Scandecor Marketing AB43. The words of the proviso are taken from the definition of unfair competition in Article 10bis of the Paris Convention. In Case 63/97, BMW Nederland v Deenik44 the Court said that the use must not mislead customers into thinking that the defendant’s business is linked to the claimant’s, or approved by it, and it must not tarnish the image of the trade mark. In Case C-100/02, Gerolsteiner Brunnen GmbH v Putsch GmbH45 the Court went further, saying ‘the conditions of hnest practice constitutes in substance the expression of a duty to act fairly in relation to the legitimate interests of the of the trade mark owner’. Descriptive use is not to be considered the opposite of trade mark use: every case depends on its facts and national courts must apply the test to determine whether the defendant has acted fairly in relation to the interests of the trade mark owner – as the Court of Appeal did in Reed. In Case Case C-228/03, The Gillette Company and Gillette Group Finland Oy v LA-Laboratories Oy46 the Court said that use of the claimant’s mark will not be within the proviso if it gives the impression that there is a commercial connection between the defendant and the trade mark owner (as in Deenik), it affects the value of the trade mark by taking unfair advantage of its distinctive character or repute, it discredits or denigrates the mark, or the defendant presents its product as an imitation or replica of the claimant’s product.

Section 11(2) sets out what the situations are in which it is permissible to use someone else’s trade mark:

  • Own name and address (re-enacting section 8 of the 1938 Act, but subject to the honest use requirement). The requirements of the proviso are not met where the defendant is trading on an established company’s goodwill.47 It will cover the use of a name adopted years before the use was questioned and used consistently in normal commercial ways. It covers a company name in the same way as the name of a natural person (Scandecor48) and it applies where a company uses its trading name (Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd49).

  • Indications concerning the kind, quality, quantity, purpose, value, or geographical origin of goods or services; the time of production of goods or of rendering of services; or other characteristics of goods or services. This may amount to use of the trade mark in a trade mark sense, but accurately - to identify the products of the proprietor. In Allied Domecq Spirits and Wine Ltd v Murray McDavid Ltd50 Lord MacFadyen in the Outer House of the Court of Session considered that the question was whether the use by the defendant of the word Laphroiag was merely an indication of geographical origin or an oblique reference to the plaintiffs’ trade mark. Case C-2/00, Hölterhoff v Ulrich Freiesleben51 the mark was used to describe how diamonds were cut. In Deenik52 the Court of Justice held that a BMW specialist should be allowed to use the BMW trade mark in order to describe the services he offers, provided he did not hold himself out as being a BMW authorised dealer. However, in AB Volvo v Heritage (Leicester) Ltd53 Rattee J held that a former dealer had to go to some lengths to avoid any suggestion that it was still a member of the network, and accordingly held that the defendant had indeed infringed the Volvo trade mark in describing itself as a member of the Association of Independent Volvo Specialists and in other respects.

  • Where it is necessary to use a registered trade mark to indicate the intended purpose of a product or service. This provision re-enacts and extends section 4(3)(b) of the 1938 Act. A spare part for a motor car would be difficult to sell if the vehicle manufacturer could enjoin the part-maker from using the name of the car which it would fit: so too with razor blades54. Likewise, service providers are allowed to use the name of the product even though it is a registered trade mark - though those who are inclined to describe themselves as ‘specialists’, especially in repairing or servicing motor cars, are likely to find the manufacturer pursuing them on other grounds, such as passing off.

A particular issue arises with keyword advertising. The Court of Justice suggested that Article 6 (equivalent to section 11(2)) is unlikely to provide a defence, although that will be a matter for the national courts. In Case C-558/08, Portakabin Ltd v Primakabin BV55 the defendant, a dealer in second-hand temporary buildings, ‘bought’ the Adword ‘Portakabin’ from Google. It had stocks which included Portakabin products among others, so in effect the trade mark was being applied to other manufacturers’ goods. The defendant’s use was therefore likely to amount to an infringement (see above, para ) and it would be for the national courts to decide whether that use fell within the proviso.

Earlier rights

The rights of owners of earlier unregistered trade marks and other signs are protected by section 11(3) – but only to a very limited extent. Section 5(4) protects the owners of earlier rights which confer the right to stop the use of a later trade mark: the existence of those earlier rights is a bar to the registration of the later mark. Section 11(3) protects rights which do not come within the ambit of that provision.

It covers rights which apply only in a limited geographical area, which precludes the possibility of using section 5(4). In this instance (though not in the case of section 5(4)) ‘earlier right’ means a sign which has been continuously used by the owner or her predecessor in business. It ‘applies in ... [a] ... locality’ if it has sufficient goodwill there to be protectable by an action for passing off, a matter which presumably can only be determined with any confidence if it actually has been protected by such proceedings.

The earlier right will be protected under this subsection if it has been in continuous use since a date earlier than either

  • the first use for the good or services in question of the later mark, or

  • its registration for those goods or services in the name of the proprietor or her predecessor in title.

The section differs somewhat from the wording of the directive. Article 6(2) provides:

The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade, an earlier right which only applies in a particular locality if that right is recognised by the laws of the Member State in question and within the limits of the territory in which it is recognised.

The use of the words ‘locality’ and ‘territory’ raises the interesting point that a mark may be recognised in a wider geographical area (a ‘territory’) than that in which it applies.

In the Chelsea Man case56 the plaintiffs were able to obtain a nationwide injunction retraining the use of their mark despite the fact that the mark was used only on shops in London and Coventry. The mark was recognised over a much wider area.

The section in the Act does not give effect to the word ‘territory’. The government believed that the addition of the last eleven words of Article 6(2) was unnecessary. They qualify the expression ‘laws of the Member State’, not ‘particular locality’. In other words, it was a provision relevant to countries which provided for registration of a trade mark at a local or municipal level but not for the UK.

Acquiesecence

Before we move on, we must note the effect of section 48 which says that if the owner of a registered trade mark acquiesces in its use by someone else for five years, they cannot bring an infringement action. This only applies where both marks are registered, so it has a close relationship with section 11(1) (use of a registered trade mark), and the result of relying on section 48 will be stalemate – both marks will remain registered, and neither will infringe the other. See paragraph Error: Reference source not found.

Exhaustion

Introduction

The principle that intellectual property rights are usually exhausted once goods have been put on the market by or with the consent of the rights-owner is a fundamental one in European Union law. It resolves the problems of parallel imports (parallel, that is, to those operated by the owner of the trade mark) that arise from having national intellectual property rights operating in a common market, and has generated a huge body of case law in the Court of Justice since the establishment of the European Communities. The principles laid down in cases involving trade marks were distilled into Article 7, implemented by section 21.

Section 12 provides that the rights of the owner of a registered trade mark are exhausted once goods bearing the mark have been put on the market in the European Economic Area by the owner of the mark or with their consent. Article 7 of the Directive requires this, reflecting the jurisprudence of the Court of Justice under what was Article 36 of the Treaty of Rome (Article 34 TFEU):

  1. The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community [now the EEA] under that trade mark by the proprietor or with his consent.

  2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.

The section repeats the article almost verbatim.

The principle of exhaustion was also found in the 1938 Act, but in much narrower terms (sections 4(3)(a) and 6). Note that it is EEA-wide exhaustion only: it is not a global exhaustion rule, so goods placed on the market elsewhere in the world and imported by a third party into the EEA may be the subject of action by the trade mark owner. Where the goods were first put onto the market is therefore a very important question.

Putting on the market

When are goods considered to have been put on the market in the EEA? The Court of Justice addressed this question in Case C-16/03, Peak Holding AB v Axolin-Elinor AB57. The goods must have been sold, whether to consumers or to another company which has the right to dispose of them. Even if the contract purports to stop the purchaser reselling the goods in the EEA, the trade mark rights are exhausted (though a breach of contract action might lie). Goods have not been put on the market if they have just been stored in a warehouse58 or displayed in a shop window. However, goods provided without transfer of ownership and with a prohibition on resale have not been put on the market.59

Goods from outside the EEA

Article 7 introduced an intra-EEA rule about exhaustion, replacing a situation in which it had been up to Member States to set their own rules (and, incidentally and controversially, derogating from the idea of a trade mark as an indication of origin). This was confirmed in Silhouette60 where the Court of Justice held that Member States were not allowed to go further than the wording of the directive and introduce a broader concept of exhaustion, so where branded goods are parallel-imported from outside the EEA (in the Silhouette case, sunglasses sold cheap in Bulgaria, not then an EU Member State, by the Austrian manufacturer and reimported by an Austrian discounter whom the manufacturer had previously refused to supply) it may infringe the rights of the trade mark owner to offer them for sale. However, it should be borne in mind in the UK that the provisions of section 10(6) and 11 may afford a defence in some cases, though if the seller does not state that the goods are parallel imports (and perhaps of inferior quality, or old stocks) it would be hard to conceive of this being in accordance with honest practices in industrial and commercial matters.

The key question regarding parallel imports which originate outside the EEA is therefore, did the trade mark owner consent to their being marketed in the EEA? The cases show some inventive approaches to trying to convince the Court that the trade mark owner really did consent to the goods being in the EEA. In Case C-173/98, Sebago Inc. and Ancienne Maison Dubois v SA G-B Unic61 the Court said that it was not a matter of whether the trade mark owner had previously imported identical goods into the EEA: what mattered was whether the particular consignment of the goods was in the EEA with the owner’s consent. There is no doctrine of implied consent. The question, whether the goods have been placed on the market with consent has to be asked of each consignment.62 Laddie J could see no justification for a rule that discriminated between goods placed on the market in the EEA on the one hand and in Singapore or the USA on the other, in Zino Davidoff SA v A&G Imports Ltd63 but the Court of Justice disagreed with him, holding in that case (joined with others64) that consent must be expressed so as to demonstrate unequivocally the owner’s intention to give up their rights under Article 5. While this normally demands an express statement, it may be implied but the facts would have to demonstrate that the owner had unequivocally given up its rights, which is a formidable hurdle to get over. A failure to tell subsequent purchasers that the goods are not to be marketed in the EEA does not amount to consent: just because there is no warning notice on the packaging of the goods or restriction in the contract of sale, or the owner remains silent about the matter, consent will not be implied. And it is for the importer to show consent, not the owner to show a lack of it.

Legitimate reasons

The principle of exhaustion does not apply where the proprietor of the mark has legitimate reasons for opposing further dealings in the goods. This might be the case if the condition of the goods had changed or impaired after they had been placed on the market. Section 12(2) implements Article 7(2) of the Directive and is consistent with the judgements of the Court of Justice, concerning repackaging, rebranding, relabelling, and overstickering, though more broadly stated.

Repackaging: In Case C-102/77, Hoffmann-La Roche v Centrafarm, the Court of Justice held that repackaging would be an infringement unless the trade mark owner’s conduct partitioned the market (for example by selling goods in different coloured packaging in different Member States), and provided that the importer indicated that the goods had been repackaged and gave notice to the trade mark owner, and that the repackaging does not affect the condition of the goods (referred to as ‘physical impairment’).

Rebranding: If the parallel importer changes the branding on the goods from that used by the trade mark owner in country A to that used in country B, in order to make the goods more readily saleable in country B, that amounts to trade mark infringement. Early cases indicated that the trade mark owner must have intended to partition the market by its branding policy,65 but subsequently the Court has made clear that this is a matter to be judged objectively, without looking at the trade mark owner’s intention.66

Relabelling: Labels may contain identification numbers to facilitate product recalls as well as trade marks, and removing the original label and replacing it with a new one may amount to trade mark infringement, as in Case C-349/95, Frits Loendersloot v George Ballantine & Sons Ltd.67

Developing the guidelines

The Court has elaborated what are referred to as the Bristol Myers Squibb68 conditions:

Article 7(2) of Directive 89/104 must be interpreted as meaning that the trade mark owner may legitimately oppose the further marketing of a pharmaceutical product where the importer has repackaged the product and reaffixed the trade mark unless:

  • it is established that reliance on trade mark rights by the owner in order to oppose the marketing of repackaged products under that trade mark would contribute to the artificial partitioning of the markets between Member States; such is the case, in particular, where the owner has put an identical pharmaceutical product on the market in several Member States in various forms of packaging, and the repackaging carried out by the importer is necessary in order to market the product in the Member State of importation, and is carried out in such conditions that the original condition of the product cannot be affected by it; that condition does not, however, imply that it must be established that the trade mark owner deliberately sought to partition the markets between Member States;

  • it is shown that the repackaging cannot affect the original condition of the product inside the packaging; such is the case, in particular, where the importer has merely carried out operations involving no risk of the product being affected, such as, for example, the removal of blister packs, flasks, phials, ampoules or inhalers from their original external packaging and their replacement in new external packaging, the fixing of self-stick labels on the inner packaging of the product, the addition to the packaging of new user instructions or information, or the insertion of an extra article; it is for the national court to verify that the original condition of the product inside the packaging is not indirectly affected, for example, by the fact that the external or inner packaging of the repackaged product or new user instructions or information omits certain important information or gives inaccurate information, or the fact that an extra article inserted in the packaging by the importer and designed for the ingestion and dosage of the product does not comply with the method of use and the doses envisaged by the manufacturer;

  • the new packaging clearly states who repackaged the product and the name of the manufacturer in print such that a person with normal eyesight, exercising a normal degree of attentiveness, would be in a position to understand; similarly, the origin of an extra article from a source other than the trade mark owner must be indicated in such a way as to dispel any impression that the trade mark owner is responsible for it; however, it is not necessary to indicate that the repackaging was carried out without the authorization of the trade mark owner;

  • the presentation of the repackaged product is not such as to be liable to damage the reputation of the trade mark and of its owner; thus, the packaging must not be defective, of poor quality, or untidy69; and

  • the importer gives notice to the trade mark owner before the repackaged product is put on sale, and, on demand, supplies him with a specimen of the repackaged product.

In Paranova II70 the Court of Justice added that the repackaging must be objectively necessary to enable the importer to have access to them market. A third party dealing with parallel imports (including repairing them) may also infringe if they do something that perhaps tarnishes the goods and causes ‘mental impairment’.71

The English courts’ approach

English courts have not been enthusiastic about the argument that poor quality repackaging can cause ‘mental impairment’ harm (as in Paranova I): Zino Davidoff SA v A&G Imports Ltd72 and Glaxo Group Ltd v Dowelhurst Ltd73. But a few years later, in Case C-143/00, Boehringer Ingelheim KG and others v Swingard Ltd and Dowelhurst Ltd (Boehringer I)74 the Court of Justice reaffirmed all the previous caselaw, and in Case C­348/04 Boehringer Ingelheim KG and others v Swingard Ltd and Dowelhurst Ltd (Boehringer II)75 it restated the applicable principles, so the English courts’ reluctance appears to be unjustified.

The ‘common origin’ problem

Within the EEA, problems may arise when identical trade marks belong to different businesses in different Member States. In Case C-40/70, Sirena v Edo,76 the Court of Justice treated an assignment like a licence by assuming it had continuing effect (as, in a way, it does): so the original owner could not stop goods from Member State A where the trade mark had been assigned to a new owner could not be kept out of Country B where the trade mark remained in the hands of the original owner. The fact that the two owners were unconnected, and even that the assignment had been made many years earlier, changed nothing. As an aside, what might have seemed logical in a Community of Six might be very different in a Union of 28.

The important matter to the Court was the common origin of the trade marks. This doctrine reached its zenith in Case C-192/73, Van Zuylen Frères v HAG AG (HAG I) 77 where the Court of Justice held that even an involuntary change in ownership did not overcome the fact that the marks had a common origin. In that case, the trade mark (for decaffeinated coffee) originated in Bremen in Germany in 1906 and was derived from the company name Kaffee Handels-Aktien-Gesellschaft, or Kaffee HAG for short. The company had subsdiaries in other countries, and at the end of the second world war the HAG trade mark in Belgium nd Luxembourg was expropriated as enemy property, coming into the ownership of Van Zuylen. The dispute arose when the German company started to export coffee to Luxembourg and Van Zuylen sued, unsuccessfully as it turned out, for infringement. In Case C-10/89, SA CNL-Sucal NV v HAG GF AG (HAG II)78 the Court of Justice reversed this position, and in Case C-9/93, IHT Internationale Heiztechnik GmbH v Ideal Standard79 it also reversed Sirena (which dealt with voluntary assignments): so now the trade mark can be enforced against the assignee. Where the use of the trade mark is licensed, however, the situation is different.

The starting point is that imports from a licensee are made with the consent of the licensor (the trade mark owner). However, that consent might be treated as having been withdrawn if the licensee breaches the licence. In Case C-59/08, Copad SA v Christian Dior Couture SA80 the licensee had failed to observe quality control provions in the licence and the Court treated the consent as withdrawn. The decision reinforces the rôle of the trade mark as a guarantee of quality, shows how important are quality control provisions in a trade mark licence, and tells us that a licensee who commits a breach will not merely be in breach of contract but will also infringe. Because the marketing is without consent, Article 7(1) will not apply (the trade mark owner’s rights will not be exhausted) and because of the possibility of damage to the mark the owner may be able to oppose further commercialisation of the goods.

Disclaimers and limitations

Section 13 deals with disclaimers and limitations, giving authority for the Registrar to permit the registration of a mark subject to a disclaimer of a particular element or a limitation on its effects. It also deals with the circumstances in which this can occur, and sets out the consequences for the rights of the proprietor.

The new Act reflects the provisions of sections 4(2) and 14 of the 1938 Act. Section 13 also replaces section 17(2) of the old Act, which dealt with conditions and limitations imposed by the Registrar.

An applicant for registration of a mark, or the proprietor of a registered trade mark, may disclaim any right to the exclusive use of any specified element of the mark. This is likely to happen where there are doubts about the distinctiveness of an element of a mark: if either the applicant wishes to avoid the possibility of a dispute with a third party over the suitability of the mark for registration, or there is a threat of opposition proceedings or some other action against the mark, a disclaimer of the disputed element may be a way to resolve the problem.

Under the 1938 Act, the Registrar was given powers to require a disclaimer of matter considered to be non-distinctive. This power is not re-enacted in the 1994 legislation.

The section goes on to say that applicants may agree that their rights will be subject to specified territorial or other limitations. This will usually concern an area of the UK which the right covers, and overcome a conflict with an earlier right. This is a voluntary means for overcoming such conflicts, and ins agreed to by the parties rather than imposed by the Registrar.

The 1938 Act gave the Registrar the authority to impose territorial limitations, permitting both marks involved in a conflict to be registered: but the Directive gives the proprietor of an earlier right the absolute right to prevent someone else from either using or registering a conflicting mark, so such limitations can only de accepted if voluntarily given.

Where a registration is subject to a disclaimer or limitations, the rights of the proprietor are accordingly restricted.

Disclaimers and limitations are entered on the register and published in the Trade Marks Journal.

Groundless threats

Section 21 of the Act makes threats of infringement proceedings actionable by anyone – not necessarily the recipient of the threats – who suffers damage as a result. However, if the threat is to sue for infringement consisting of manufacturing or importing goods, or supplying services, under the mark, no remedy is given.

The purpose of the provision is two-fold:

  • it obliges trade mark owners to expose their marks to the possibility of a counterclaim for revocation, rather than relying on the expense of defending a threatened action (which may be groundless) to deter the recipient from continuing to use the sign: and

  • it protects smaller businesses – for example, retailers – rather than substantial manufacturing concerns that should be able to assess the merits of a threat.

In Prince plc v Prince Sports Goods Inc81 the plaintiffs obtained a declaration and an injunction after being threatened by the defendants with proceedings for infringement arising out of their use for computer services of the prince.com domain name. The defendants’ threat was made to comply with the Domain Name Dispute Policy operated by Network Solutions Inc, which gave the registrant of the domain name the option of countering with their own legal proceedings – and section 21 was precisely what the plaintiffs needed.

In L’Oréal (UK) Ltd v Johnson & Johnson82 the High Court considered that a letter which reserved the right to bring future trademark proceedings was reasonably understood to constitute a threat. The trademarks in issue were ‘Johnson’s No More Tears’ and ‘No More Tears’, which were registered by the first defendant for baby shampoos. The second defendant was the UK subsidiary of the first defendant, and its licensee.

The claimant launched a range of children’s hair products in 1999 with the caption “NO TEARS” on the packaging and the defendants brought infringement proceedings in Ireland. The claimant’s English solicitors wrote to the first defendant asking for their confirmation that similar proceedings would not be brought in the UK, and the first defendant’s solicitors wrote back reserving their client’s right to sue. The claimants then took proceedings under Section 21 also seeking a declaration of non-infringement. The claim was struck out by Master Bragg on the grounds that there was no threat and there were insufficient grounds for seeking a declaration, and the claimant appealed to the High Court which allowed the appeal.

Even though the letter disclaimed any threat, the court considered that it constituted one, and that it went further than merely reserving the defendant’s rights. In fact the letter went on to state that the defendants had not decided whether or not to sue, that others had desisted from using the words “no tears” on their packaging, that the defendants had six years in which to commence proceedings, and that they would give no comfort as far as the possibility of proceedings was concerned. Evidence was brought that the letter was reasonably read and understood by the claimant to be a warning of possible future proceedings, perhaps dependent on the outcome of the Irish action. The judge, Lightman J, held that when someone in the defendant’s position writes ‘a letter designed to be close to the line between what was and what was not a threat or adverse claim, he should not be surprised if the court held that it was at least arguable that there was a threat or adverse claim.’

1The preamble to the Directive mentions the origin function of a trade mark: trade mark use is therefore taken to involve use so as to indicate origin. Article 5 of the Directive leaves non-trade mark uses for the laws of Member States to deal with.

2[1996] FSR 205.

3[1997] FSR 211.

4In Mars v Cadbury [1987] RPC 387 the defendants’ use of the description ‘treat-sized WHISPA bars’ did not infringe the claimant’s TREETS trade mark because it was descriptive, not origin-indicating.

5Case C-206/01, Arsenal FC v Matthew Reed [2002] ECR I-10273.

6Case C-17/06, Céline SARL v Céline SA [2007] ECR I-7041, and for an application of this case in the English courts see RxWorks Ltd v Hunter (t/a Connect Computers) [2007] EWHC 3061 (Ch)[2008] RPC 303 (20 December 2007) (Daniel Alexander QC sitting as a deputy High Court judge).

7[2003] ECR II-1677.

8The reference to services being ‘manufactured’ appears to be one of those nonsenses that too often emanate from the EU.

9[2004] EWHC 1498 (Ch) (29 June 2004) (Geoffrey Hobbs QC sitting as a deputy judge).

10[1995] RPC 117.

11This confused state of affairs was commented on in RxWorks. While compound prepositions are usually best avoided, using three times as many words as are generally needed, this might be one of those instances when there is a good reason for verbosity. ‘For’ is an awkward word to use in the context: a trade mark is surely used ‘on’ goods, but cannot be used ‘on’ services (no more than services can be ‘manufactured’), so a compound preposition – either of those quoted seems to be up to the job – is probably called for.

12Beaumatic International v Mitchell International Pharmaceuticals [2000] FSR 267.

13[2007] ECR I-1017.

14[xxxx] ECR I-

16On this point, the judge said ‘see in particular Case C-206/01 Arsenal Football plc v Reed [2002] ECR I-10273 at [51], Case C-245/02 Anheuser-Busch Inc v Budejovicky Budvar np [2004] I-10989 at [59], Case C-48/05 Adam Opel AG v Autec AG [2007] ECR I-1017 at [18]-[22] and Case C-17/06 Céline SARL v Céline SA [2007] ECR I-7041 at [16].’

18Specsavers International Healthcare Ltd & Ors v Asda Stores Ltd [2012] EWCA Civ 24 (31 January 2012).

19[2012] EWHC 1929 paragraph 78.

20[2009] ECR I-09429.

21Case C-281/05, Montex Holdings v Diesel [2006] ECR I-10881.

22See Autodrome TM [1969] RPC 564.

24

26[1998] FSR 92.

27[2005] ECR I-8735.

28[2008] FSR 313.

29LA Gear v Hi-Tech Sports [1992] FSR 121, confirmed in Vermaat & Powell v Boncrest (No 2) [2002] FSR 331.

30Euromarket Design Inc. v Crate & Barrel Ltd [2001] FSR 288.

31[1986] FSR 45.

32[1989] FSR 126.

33[1993] RPC 32.

34Section 4(1)(b) of the 1938 achieved considerable notoriety when in Bismag Ltd v Amblins Chemists Ltd [1940] Ch 6670 Mackinnon LJ’s commented:

In the course of three days hearing of this case I have, I suppose, heard section 4 of the Act of 1938 read, or have read it for myself, dozens if not hundreds of times. Despite this iteration I must confess that, reading it through once again, I have very little notion of what the section is intended to convey, and particularly the sentence of two hundred and fifty-three words, as I make them, which constitutes sub-section 1. I doubt if the entire statute book could be successfully searched for a sentence of equal length which is of more fuliginous obscurity.

This is why trade mark lawyers are the only people who know what ‘fuliginous’ means – it is derived from the Latin word for ‘soot’.

35[1996] RPC 357.

36[1997] FSR 34.

37Unreported, 18 December 1996.

38[2001] FSR 541.

39Directive 97/55/EC, of the European Parliament and of the Council of 6 October 1997 amending Directive 84/450/EEC concering misleading advertising so as to include comparative advertising, [1997] OJ L290/18, now consolidated as Directive 2006/114/EC of the European Parliament and the Council of 12 December 2006 [2006] OJ L376/21, implemented by the Control of Misleading Advertising Regulations 2000, SI no 914. The Regulations provide for control by the Director General of Fair Trading, but the criteria by which such advertisements are judged to be misleading are likely to influence the court in trade mark cases.

40[2008] ECR I-4231. Note the name of the defendant, which is often mis-spelled ‘Hutchinson’.

41[1996] FSR 473.

42[1996] FSR 431.

43[1998] FSR 500 (CA).

44[1999] ECR I-905.

45[2004] ECR I-691.

46[2005] ECR I-2337.

47See IBM Corporation v Web-Sphere Ltd [2004] FSR 796 (where the defence failed, because the defendant had changed its name shortly after the claimant launched its product, to take advantage of its success), and contrast Reed Executive plc v Reed Business Information Ltd [2004] RPC 767 (where the defence succeeded).

48Supra., note 43.

49[2010] EWCA 110.

50[1997] FSR 864.

51[2002] ECR I-4187.

52Supra., note 44.

53[1999] All ER (D) 478.

54Case C-228/03, Gillette, supra., note 46.

56Chelsea Man Menswear Ltd v Chelsea Girl Ltd [1987] RPC 189.

57[2004] ECR I-11313.

58Class International, note 27, supra.

59Case C-127/09, Coty Prestige Lancaster Group GmbH v Simex Trading AG [2010] ECR I- 04965. The goods in question were ‘perfume testers’, a rather special case which means that this precedent is not likely to help many trade mark owners.

60Silhouette International Schmied GmbH & Co KG v Hartlauer Handelsgessellschaft mbH, case C-355/96, [1998] The Times 2 July (Court of Justice).

61[1999] ECR I-4103.

62Peak.

63[1999] 2 CMLR 1056.

64

65Case C-3/78, Centrafarm v American Home Products [1978] ECR 1823.

66Case C-379/97, Pharmacia & Upjohn SA v Paranova A/S (Paranova II) [1999] ECR I-6927.

67[1997] ECR I-6227.

68Case C-427/93, Bristol-Myers Squibb v Paranova A/S, Case C-429/93 C. H. Boehringer Sohn, Boehringer Ingelheim KG and Boehringer Ingelheim A/S v Paranova A/S and Case C-436/93, Bayer Aktiengesellschaft and Bayer Danmark A/S v Paranova A/S [1996] ECR I-3457. See also Joined Cases C-71/94, C-72/94 and C-73/94, Eurim-Pharm Artztnimiittel v Beiersdorf AG [1996] ECR I-3603 and Case C-232/94, MPA Pharma v Rhône-Poulenc (Paranova I) [1996] ECR I-03671

69This has been referred to, with little regard to semantics, as ‘mental impairment’, in distinction to ‘physical impairment’ mentioned above under ‘Repackaging’.

70Note 66, supra.

71Case C-337/95 Perfums Christian Dior v Evora BV [1997] ECR I-6013.

72[1999] 2 CMLR 1056.

73[2000] 2 CMLR 571.

74[2002] ECR I-03759.

75[2007] ECR I-03391.

76[1971] ECR 69.

77[1974] ECR 731.

79[1994] ECR I-2789.

80

81[1998] FSR 21.

82[2000] ETMR 691, [2000] FSR 686.

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