Learn how the IP Bill will affect you

The Intellectual Property Bill has passed through the Commons and now awaits royal assent. Although much attention has focused on clause 13 of the Bill which will create a new offence of unauthorized copying of a registered or registered Community design in the course of business the legislation makes a number of useful changes to registered and unregistered designs and patents law.

I have written a number of articles on the Bill for this blog:

• "The Intellectual Property Bill" 26 May 2013
• "Correspondence with my MP on Clause 13 of the Intellectual Property Bill" 29 May 2013, and
• "Clause 13 of the Intellectual Property Bill will probably go through. What next?" 20 Dec 2013.

I also made written submissions on the Bill as it passed through committee in the House of Commons.

My colleague, Thomas Dillon, has also analysed the Bill though he has tended to welcome clause 13 (see Thomas Dillon "UK: Intellectual Property Bill" 28 May 2013 4-5 IP/Tech blog).

On the 19 May 2014 my colleague, Alexander Rozycki, and I will lead a seminar on the Bill. I will present an introduction and overview tracing the legislative history from the Hargreaves review and outlining the main provisions. Alex, who specializes in IP crime, will analyse clause 13, the probanda for criminal liability, defences and countermeasures and will compare this clause with similar provisions in the Copyright, Designs and Patents Act 1988 and the Trade Marks Act 1994. I will conclude by discussing the procedural reforms such as extending the IPO opinions service to designs and other patent issues, introducing the appointed person into design registration appeals and, of course, the Unified Patent Court.

We make no charge for attending this seminar but you must reserve your place in good time as we have already had our first booking.  You can book through the link above or call George on 020 7404 5252. The seminar will start at 16:00 and will last for 2 hours with a break for refreshments.  CPD points for the SRA and BSB will be available. nline Ticketing for The Intellectual Property Bill powered by Eventbrite

Equitable Interests in Patents and Patent Applications

In Yeda Research and Development Company Ltd v. Rhone-Poulenc Rorer International Holdings Inc and Others [2007] Bus LR 1796, [2007] BusLR 1796, [2008] 1 All ER 425, [2007] UKHL 43 Lord Hoffmann described s.7 (2) and (3) of the Patents Act 1977 as "an exhaustive code for determining who is entitled to the grant of a patent." For determining entitlement to the grant maybe because s.32 (3) of the Act provides that

"Notwithstanding anything in subsection (2)(b) above, no notice of any trust, whether express, implied or constructive, shall be entered in the register and the comptroller shall not be affected by any such notice."

But not necessarily to ownership because s.30 (1) states that patents and patent applications are personal property and sub-section (3) adds that they may vest by operation of law in the same way as any other personal property.

Disputes over equitable interests in patents or patent applications are fairly rare but they can arose in circumstances that fall outside s.7 (2) or (3). One such instance arose in Foster’s Australia Limited v Cash’s (Australia) Pty Ltd [2013] FCA 527. Another was French v. Paul Julian Mason and another  [1998] EWHC Patents 290.  In Twentieth Century Fox Film Corp. and Others v Harris and Others [2013] EWHC 159 (Ch), [2013] 2 WLR 1454, [2014] 1 CH 41, [2013] WLR(D) 42, [2013] EMLR 16, a copyright case, it was argued unsuccessfully that the infringement of an intellectual property right creates a constructive trust in the fruits of such infringement. Of those three cases, the only one in which a constructive trust was actually found to have arisen was the first.  It has to be treated with some caution for, as Mr Justice Newey observed in Harris at paragraph [28 (ii)]:  "The Australian approach to constructive trusts is by no means the same as that in this jurisdiction."

In Forster's case Foster's Australia Limited ("FAL") the claimant (or "applicant" as it is called in Australia) was a member of a well-known group of companies in beer and other alcoholic beverages ("the Group"). FAL sued Cash's Australia Pty Ltd for patent and registered design infringements ("Cash"). Cash’s responded, in part, that the patents and designs in question were invalid and liable to be revoked because the original applications to IP Australia were not made in FAL’s name but in the name of another company in the Foster’s Group.  The Federal Court of Australia ordered the question of whether the patents and design registrations were invalid and liable to be revoked as preliminary issues.

At the time of the applications for the patents and registered designs Foster's Group Ltd ("FGL") was the ultimate holding company of the Group and FAL was its wholly owned subsidiary. Most of the staff working for the Group were employed by another wholly owned subsidiary of FGL called Foster’s People Pty Ltd ("People"). The contract of employment under which People employed its staff including the Group's in-house legal advisers and patent attorneys contained the following clause:

"In your role for Foster’s People [FPPL] you may be required to undertake duties relating to the business of any company in the Foster’s group of companies (Foster’s Group). The Foster’s Group comprises all companies related to Foster’s Group Limited (Foster’s) within the meaning of the Corporations Act 2001.
...
You must:
...
(c) Use your best endeavours to promote and enhance the interests, profitability, growth and reputation of Fosters and the Foster’s Group companies;
(d) Act in the best interests of Foster’s and not intentionally do anything which is or may be harmful to Foster’s or any Foster’s Group company ..."

The Group and its member companies adopted a policy known as the IP Policy which stated:

"Intellectual property constitutes one of the most valuable assets of the Foster’s Group, underpinning its brands, business operations, commercial relationships and innovations developed within the businesses.
...
Foster’s is committed to “best practice” management of its intellectual property assets to ensure that they are fully secured, controlled and utilised to best effect to support and promote its business objectives.
Specifically, Foster’s policy is to implement a global management approach to its intellectual property assets through centralised management of registrable intellectual property and the provision of advisory services to the Group’s businesses on the control and use of intellectual property generally. This purpose of this policy is to both ensure appropriate security of intellectual property assets and to extract maximum value from utilisation of these assets in the competition market place."

At the time of the patent and design applications it was common for FAL to be the registered proprietor of much of the registered IP rights ("IPR") relating to the Group’s beer business, although other companies within the Group frequently used those IPR.

By a written agreement dated 23 Dec 2008 FAL commissioned Dot Design Pty Ltd ("Dot") a product design and development company to design, manufacturer and deliver a range of draught beer tapware and handles for the Group's bars and pubs. The agreement provided for all IPR to belong to and be owned by FAL immediately and absolutely for its own use and benefit in any manner it sees fit without any further fee payable to or consent required from Dot. It also required Dot to assign or transfer all relevant IPR to FAL and sign off all such documents and do all such things necessary in order to give effect to that clause. Pursuant to that agreement Dot designed and developed a mounting device and badge holder for which the FGL applied for patents and registered designs.

S.15 of the Australian Patents Act 1990 is very similar to s.7 (2) of the British Act:

"Subject to this Act, a patent for an invention may only be granted to a person who:
(a) is the inventor; or
(b) would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or
(c) derives title to the invention from the inventor or a person mentioned in paragraph (b); or
(d) is the legal representative of a deceased person mentioned in paragraph (a), (b) or (c)."

Similarly, s.13 (1) of the Australian Designs Act 2003 provides:

"A person mentioned in any of the following paragraphs is entitled to be entered on the Register as the registered owner of a design that has not yet been registered:
(a) the person who created the design (the designer);
(b) if the designer created the design in the course of employment, or under a contract, with another person – the other person, unless the designer and the other person have agreed to the contrary;
(c) a person who derives title to the design from a person mentioned in paragraph (a) or (b), or by devolution by will or by operation of law;
(d) a person who would, on registration of the design, be entitled to have the exclusive rights in the design assigned to the person;
(e) the legal personal representative of a deceased person mentioned in paragraph (a), (b), (c) or (d)."

Cash argued that both the patent and design registrations were invalid because FGL was neither the inventor nor the designer and it did not have a contract with the inventor or designer that fell within the provisions of either statute.

Mr. Justice Kenny decided both preliminary issues against Cash on other grounds. However, and this is the interesting bit, His Honour observed at paragraph [126]:

"There was an alternative analysis put forward by FAL at the hearing to the effect that FGL held the registration of the design as a constructive trustee for FAL. In this case, applications for registration of the designs were made by FGL, although FAL, not FGL, was entitled to registration of the designs. FAL had acquired its entitlement under a commercial agreement with Dot. As already noted, the agreed facts and the evidence made it likely that, save for Allen’s, no-one at FAL or FGL (or anyone else acting for them) knew that FGL, rather than FAL, was the applicant for registration. Save for Allen’s, the evidence justifies the conclusion that no representative of either company turned his or her mind to this fact until late on 13 January 2010, when Mr O’Keefe noticed what had occurred."

The judge continued in the next paragraph:

"In the circumstances of the case, I would find, if it were necessary to do so, that FGL held the applications for design registration and registration of the designs as constructive trustee for FAL. Both companies were, of course, members of the Foster’s Group; and, as the Policy of the Group stated, intellectual property of this kind was to be devoted to the interests of the Group, specifically by securing it and obtaining “maximum value from utilisation of these assets in the competition market place”. 

In support of that finding Mr Justice Kenny relied on Mr Justice Gordon's dicta in Figgins Holdings Pty Ltd v Registrar of Trade Marks (1995) 59 FCR 147 at 149:

"[W]here an application for registration is made by other than the true owner, the court may rectify the situation by imposing a constructive trust on the application and subsequent registration from the date on which the application was lodged and additionally or alternatively rectifying the register through substitution of the true owner’s name."

This rule derives from the High Court of Australia's decision in Chang v Registrar of Titles (Vic) [1976] HCA 1; (1976) 137 CLR 177 which was no doubt one of the authorities that Mr Justice Newey would have had in mind in Harris.

In French the claimant, one Christopher Simon French ("Mr French") had invented a sleeper earring which was marketed under the name "The Invincible". When he invented the sleeper the inventor was a director, shareholder and employee of a small close company called Acme Jewellery Ltd ("Acme") of which one Paul Julian Mason ("Mr Mason") was the other director and shareholder. Acme applied for and was granted patents for the invention.  Mr French and Mr Mason fell out big time as a result of which Mr French was excluded from the management of the company. Mr French sued for unfair dismissal, relief under s.459 of the Companies Act 1985 and a declaration that Acme held the patents on constructive trusts for Mr French. The unfair dismissal proceedings were compromised by a payment to Mr French from Acme. In the unfair prejudice proceedings Mr French also succeeded in obtaining an order for Mr Mason to purchase Mr French's shares at a valuation that allowed no discount for his minority share but on terms that Mr French would not apply for employee's compensation under s.40 of the Patents Ac 1977. The grounds upon which Mr French claimed an equitable interest in the patents was that Acme had been a quasi partnership and that the company and Mr Mason owed a fiduciary duty to Mr French to ensure that the objectives of the quasi partnership were carried out.  By applying for patents in the name of the company rather than that of Mr French the company and Mr Mason had breached that duty. In the words of the statement of clam:

"The lodging of the completed specification by [Mr Mason] in the name of [Acme] was unconscionable and a breach of the fiduciary duty owed by [Mr Mason] to [Mr French]. Once [Mr Mason] has, by procuring the dismissal of the Plaintiff, evinced an intention to repudiate the agreement between himself and [Mr French] as appears in Paragraph 9 herein, it was unconscionable to continue with the lodging of the specification in the name of [Acme] thereby appropriating [Mr French's] invention where [Mr Mason and Acme] have been unjustly enriched."

The company and Mr Mason applied for the claim to be struck out.

The application came on before Mr Justice Pumfrey.   The judge considered whether there had been an institutional constructive trust of a remedial constructive trust.

As to whether there had been an institutional constructive trust, His Lordship said at paragraph [13]:

"So far as the institutional constructive trust is concerned, the question is whether on the facts pleaded the plaintiff has the beneficial ownership of the patent. As I understand it, it is essential to consider the circumstances in which the disputed property (the invention) came into the alleged trustee's hands. Where it represents an advantage obtained by unconscionable dealing, or property obtained in breach of fiduciary obligations, or is obtained in consequence of a breach of trust, the position is no doubt clear. But the property subject to the alleged constructive trust must have come into the hands of the alleged trustee in consequence of such behaviour. In a case to which section 39 of the Patents Act 1977 applies, I am quite satisfied that there is no question of the employee retaining beneficial ownership as against the employer. Were this the case, the employer would require a licence to work the invention, a possibility of which there is no suggestion anywhere in the section. Where the section speaks of the invention being "taken to belong to his employer for the purposes of this Act and all other purposes" it is in my view plainly talking about ownership in a sense which is not technical, and which does not distinguish between legal and equitable ownership. It is talking of the ownership which permits the owner to deal with the patent and to work under it."

Mr French had relied on the quasi partnership under which he had  obtained relief under s.459. The judge observed that "the use of the term quasi partnership is merely use of a convenient shorthand to describe a relationship in which the just and equitable ground for winding up may be invoked" but it does not affect the status of any of the parties to such proceedings and in particular it does not make them into partners. In Mr Justice Pumfrey's judgment there was no basis upon which the invention in Acme's hands could be said to have been impressed with a constructive trust in favour of Mr French because of the circumstances in which the invention came to be held by Acme.

As to whether there had been a remedial constructive trust the judge started with the observation that Mr French has obtained compensation for his unfair dismissal, and has also obtained an order under s 459 for his shares to be purchased at a price which does not reflect the fact that they are a minority shareholding. Mr French had a claim for compensation in relation to the use of the patents by Acme under s 40 of the 1977 Act. He observed at paragraph [20]:

"Plainly a company owes no fiduciary duties to its directors, and the directors owe no fiduciary duties to the members. Unfair dismissal or dismissal in breach of the contract of employment is not a breach of a fiduciary duty by the employer. What gives rise to the claim in the present case is purely the personal relationship between Mr French and Mr Mason."

He concluded in the next paragraph:

"I am quite satisfied that the claim arising out of the dismissal of Mr French cannot give rise to an imposed proprietary remedy affecting the patent. There is no nexus between the alleged breach and the remedy sought. To stigmatise the dismissal as being in breach of a fiduciary duty is irrelevant. It cannot affect the remedy. So far as the claim in relation to the filing of the divisional in 1992 is concerned, I have already explained why, if Acme were entitled to the invention, the act of filing the divisional cannot be described as a breach of any duty at all. It follows that the claim for a remedial constructive trust must fail."

As I have noted above, one of the terms upon which Mr French was granted relief was that he would not claim  compensation under s.40. Referring to that provision, the judge struck out the claim on the ground that the action was also an abuse of the process of the court.

In Harris the claimants argued that, where a copyright is infringed, the copyright owner has a proprietary claim to the whole proceeds of the infringement. Those proceeds, it was submitted, are held on constructive trust for the copyright owner. In support of that contention the claimants argued that s. 96 (2) of the Copyright, Designs and Patents Act 1988 states that, in an action for infringement of copyright, "all such relief by way of damages, injunctions, accounts or otherwise is available to the plaintiff as is available in respect of the infringement of any other property right".  In their submission the words "or otherwise" could cover a proprietary remedy. Mr Justice Newey threw out the application on the grounds that it was unsupported by authority and wrong in principle though it was common ground that a copyright, like any other IPR could be held on constructive, implied and resulting trusts.

Although the comptroller has very extensive jurisdiction under s.8. s.12 and s.37 of the Patents Act 1977 which includes a power to revoke a patent under s.72 to allow a patent to be granted to the person entitled to it, it seems unlikely that he could determine the issues that arose in any of the cases that have been discussed above. Apart from every other consideration he is precluded by s.32 (3) from taking notice or being affected by any trust whether express, implied or constructive. That means that any consideration of such issues has to be by the Patents Court or the Intellectual Property Enterprise Court.

If anyone wants to discuss this article or any of the issues arising out of it he or she should call me on 020 7404 5252 or fill in my contact form. If he or she wants to discuss Foster's or any of other Australian case the best person to approach is Robert Griffiths QC who is also a member of the New South Wales Bar. Members of the public can also tweet me, write on my wall, or contact me through G+, Linkedin or Xing.

Trade Marks and Internet Searches: Lush v Amazon

Jane Lambert

In Cosmetic Warriors Ltd and Another v amazon.co.uk Ltd and Another [2014] EWHC 181 Mr John Baldwin QC, sitting as a judge of the High Court, had to decide whether causing advertising  to appear on an an Internet user's screen for products that competed with those of the claimants whenever  the user entered the claimants' trade mark into a search box amounted to an infringement of the claimants' mark.

The Parties
The claimants ("Lush") manufacture and supply cosmetics under the Lush brand. They are well known for their colourful soaps and bath bombs.  The first named claimant is the registered proprietor, and the second its licensee, of Community trade mark number 01388313 ("the CTM") under which the word LUSH is registered for

"Perfumes; bath preparations; non-medicated toilet preparations; cosmetic preparations; lotions, powders and creams all for use on the skin; dentifrices; depilatory preparations; deodorants; toilet articles; preparations for care of the hair; shampoos; soaps; essential oils; massage creams and lotions"

in class 3 and

"Pharmaceutical preparations and substances; products and preparations for the care of skin, hair, teeth or nails"

in  class 5.

The defendants are members of the Amazon group which claims to be the largest on-line retailer in the world. Amazon has perfected software that analyses Internet users' behaviour and presents advertisements for products likely to be of interest to them either on Google through Google AdWords or on Amazon's own website whenever a user keys in a particular search term. It was that software that gave rise to this action.

The Complaint
Lush complained had three sets of complaints.

The first was that the following advertisement would appear whenever the word LUSH in  upper or lower case was entered into Google:

"Lush Soap at Amazon.co.uk
www.amazon.co.uk/lush+soap
amazon.co.uk is rated *****
Low prices on Lush Soap
Free UK Delivery on Amazon Orders."

The problem for Lush was that they do not sell their soap or indeed any of their other products through Amazon because they fear that it would be bad for their reputation in the UK if they did. Consequently, anyone clicking on the link would be taken to a page that showed only competing products.

The second complaint was that the following advertisement would appear whenever a user searched for "lush cosmetics bath bomb":

"Bomb Bath at Amazon.co.uk
www.amazon.co.uk/bomb+bath
amazon.co.uk is rated *****
Low prices on Bomb Bath
Free UK Delivery on Amazon Orders."

Again, the user would be led to a page advertising competing bath bomb products whenever he or she clicked the bath bomb link

Lush's third complaint was that the following page would appear whenever a user typed the word "LUSH" in upper or lower case into the search box on the Amazon website:

Lush argued that Amazon's method of advertising amounted to a straightforward infringement of CTM 01388313 under art 9 (1) (a) of the Community trade mark regulation (Council Regulation  (EC) No 207/2009 of 26 February 2009 on the Community trade mark OJ 24.2.2008 L 78/1) in that a sign identical to the CTM had been used in relation to goods that were identical to those for which the CTM had been registered.

The Judgment
Mr. Baldwin found that Lush's first and second complaints were well founded but not the second.

Ratio Decidendi
The judge's starting point at paragraph [29] was

"that, to establish infringement under Article 5(1)(a) of the Directive [the equivalent to art 9 (1) (a) of the Community trade mark regulation], six conditions must be satisfied: (i) there must be use of a sign by a third party within the relevant territory, (ii) the use must be in the course of trade, (iii) the use must be without the consent of the proprietor of the trade mark, (iv) the use must be of a sign which is identical to the trade mark, (v) the use must be in relation to goods or services which are identical to those for which the trade mark is registered, and (vi) the use must be such as to affect or be liable to affect the functions of the trade mark."

From paragraphs [75] and [98] of  the Court of Justice's judgment in Case C-236/08 Google France SARL and another v Louis Vuitton Malletier SA and others [2010] EUECJ C-236/08, 3 ALR Int'l 867, [2010] ECR I-2417, [2011] All ER (EC) 411, [2010] RPC 19, [2010] ETMR 30, [2011] Bus LR 1 Mr Baldwin discerned the following principles:

"1. where an advertiser purchasers from a search engine operator (such as Google) a keyword which is identical to a third party's trade mark in order to display a link to a site on which he offers his goods or services for sale, that advertiser uses the third party's trade mark in the course of trade.
2. where an advertiser, through use of a keyword, is seeking to offer its own goods or services as an alternative to those of the third party, the advertiser uses the sign comprising the keyword in relation to those goods or services
3. in the circumstances of the foregoing, it is for the national court to assess, on a case-by case basis, whether the use made by the advertiser affects the functions of the trade mark.
4. whether the function of a trade mark is adversely affected depends in particular on the manner in which the ad is presented,
5. the function of indicating origin will be adversely affected if the ad does not enable normally informed and reasonably attentive internet users or enables them only with difficulty, to ascertain whether the goods or services referred to in the ad originate from or are connected with the proprietor of the mark or, on the other hand, from a third party
6. ordinary keyword advertising is not liable to have an adverse effect on the advertising function of a trade mark."

 As to whether the use made by Amazon of the word "Lush" affected the functions of the CTM Mr Baldwin referred to the following paragraphs of the judgment in  Google France:

"84 The function of indicating the origin of the mark is adversely affected if the ad does not enable normally informed and reasonably attentive 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 an undertaking economically connected to it or, on the contrary, originate from a third party (see, to that effect, Céline, para.27 and the case-law cited).
85 In such a situation, which is, moreover, characterised by the fact that the ad in question appears immediately after entry of the trade mark as a search term by the internet user concerned and is displayed at a point when the trade mark is, in its capacity as a search term, also displayed on the screen, the internet user may err as to the origin of the goods or services in question. In those circumstances, the use by the third party of the sign identical with the mark as a keyword triggering the display of that ad is liable to create the impression that there is a material link in the course of trade between the goods or services in question and the proprietor of the trade mark (see, by way of analogy, Arsenal Football Club , para.56, and Case C-245/02 Anheuser-Busch Inc v Budejovicky Budvar NP [2004] E.C.R. I-10989, [2005] E.T.M.R. 27, para.60).
86 Still with regard to adverse effect on the function of indicating origin, it is worthwhile noting that the need for transparency in the display of advertisements on the internet is emphasised in the European Union legislation on electronic commerce. Having regard to the interests of fair trading and consumer protection, referred to in recital 29 in the preamble to Directive 2000/31, Art.6 of that Directive lays down the rule that the natural or legal person on whose behalf a commercial communication which is part of an information society service is made must be clearly identifiable.
87 Although it thus proves to be the case that advertisers on the internet can, as appropriate, be made liable under rules governing other areas of law, such as the rules on unfair competition, the fact nonetheless remains that the allegedly unlawful use on the internet of signs identical with, or similar to, trade marks lends itself to examination from the perspective of trade-mark law. Having regard to the essential function of a trade mark, which, in the area of electronic commerce, consists in particular in enabling internet users browsing the ads displayed in response to a search relating to a specific trade mark to distinguish the goods or services of the proprietor of that mark from those which have a different origin, that proprietor must be entitled to prohibit the display of third-party ads which internet users may erroneously perceive as emanating from that proprietor."

 On AdWords the deputy judge referred to the judgments of the Court of Appeal in Reed Executive Plc and Others v Reed Business Information Ltd and Others  [2004] RPC 40, [2004] ETMR 56, [2004] EWCA Civ 159, (2004) 27(6) IPD 27058, [2004] Info TLR 55, [2004] Masons CLR 29 and Mr Justice Henderson in 32Red Plc (A Gibraltar Company) v WHG (International) Ltd. and Others [2011] ETMR 21, [2011] EWHC 62 (Ch).

As to Lush's first complaint, there was no doubt in the light of Google France that Amazon had used a sign identical to the CTM in relation to identical. The only issue seriously in dispute was whether such use affected or was likely to affect the functions of the trade mark. On that point Amazon had argued that no Internet user was likely to be misled by ads such as the one complained of as he or she would be very familiar with them and was likely to ignore them but if a user did click the link in the ad he would quickly see that Amazon did not offer Lush products. Mr Baldwin rejected that argument at paragraph [42]:

"In my judgment, Lush establishes infringement with respect to this class of case. I consider that the average consumer seeing the ad in paragraph 8 above would expect to find Lush soap available on the Amazon site and would expect to find it at a competitive price. Moreover, I consider that it is likely that if he were looking for Lush soap and did not find it immediately on the Amazon site, then he would persevere somewhat before giving up. My reason is that the consumer is likely to think that Amazon is a reliable supplier of a very wide range of goods and he would not expect Amazon to be advertising Lush soap for purchase if it were not in fact available for purchase. Thus, on the facts of this case, I reject Mr Carr's argument to the effect that the average consumer would, without difficulty, ascertain that the goods referred to by the ad were not the goods of or connected with Lush, the Claimants."

The same point arose with regard to Lush's second complaint. Lush had argued "that it was clear that the average consumer would expect the sponsored link to be of goods which were identified from the search term entered by the consumer." Mr. Baldwin rejected that argument on the ground that it failed "to recognize that consumers are familiar with sponsored ads and are used to seeing such ads from competing suppliers." Lush are brand conscious and had made great efforts to build up a reputation for the Lush mark. The average consumer would not expect to find Lush products on a sponsored search particularly if the same search sparked off all sorts of similar sponsored ads from retailers other than Amazon.

According to Amazon the third complaint went to the heart of Amazon's business model. Amazon contended that the generation of the page shown above did not amount to "use" of the CTM or, if it did, it ought to be allowed because

"Amazon's search facilities are of benefit to the consumer since they enable easy navigation of the Amazon catalogue and enable consumers to locate information and decide for themselves whether that information is relevant. He submitted that the search engine places the consumer in control of the search process and that Lush are seeking by this action to remove that control from consumers and thereby restrict or hinder competition. He urged that intellectual property rights should not be exercised in a way which unduly interferes with the basic right of the public to access technological development, relying onGoogle France and the observations of Lord Sumption in Public Relations Consultants Association Ltd v Newspaper Licensing Agency [2013] UKSC 18."

Mr Baldwin rejected that argument shortly at paragraph [53]:

"In my judgment, however this right of the public to access technological development does not go so far as to allow a trader such as Amazon to ride rough shod over intellectual property rights, to treat trade marks such as Lush as no more than a generic indication of a class of goods in which the consumer might have an interest."

The reason why Amazon argued that it did not use the CTM was that the Court of Justice had said ub Case C-324/09 L’Oréal SA and Others v eBay International AG and Others [2011] RPC 27, [2011] EUECJ C-324/09, [2011] ETMR 52, [2012] Bus LR 1369, [2012] All ER (EC) 501, [2012] EMLR 6:

"C— The eighth question concerning the use of signs corresponding to trade marks in offers for sale displayed on the website of an operator of an online marketplace
98    By its eighth question, the referring court asks, in substance, how the display, on the website of the operator of an online marketplace, of signs identical with or similar to trade marks is to be regarded in the light of Directive 89/104 and Regulation No 40/94.
99    In that regard, it is first necessary to point out that, where sales are made through online marketplaces, the service provided by the operator of the marketplace includes the display, for its customer-sellers, of offers for sale originating from the latter.
100    Next, when such offers relate to trade-marked goods, signs identical with or similar to trade marks will inevitably be displayed on the website of the operator of the online marketplace.
101    Although it is true that, in those circumstances, those signs are 'used' on that site, it is none the less not evident that it is the operator of the online marketplace that is 'using' them, within the meaning of Directive 89/104 and Regulation No 40/94.
102    If a sign identical with, or similar to, the proprietor's trade mark is to be 'used', within the meaning of Art.5 of Directive 89/104 and Art.9 of Regulation No 40/94, by a third party, that implies, at the very least, that that third party uses the sign in its own commercial communication. In so far as that third party provides a service consisting in enabling its customers to display on its website, in the course of their commercial activities such as their offers for sale, signs corresponding to trade marks, it does not itself use those signs within the meaning of that EU legislation (see, to that effect, Google France and Google, paras.56 and 57).
103 As was stated, inter alia by the United Kingdom Government and the Commission at the hearing and by the Advocate General at points 119 and 120 of his Opinion, it follows that the use of signs identical with or similar to trade marks in offers for sale displayed on an online marketplace is made by the sellers who are customers of the operator of that marketplace and not by that operator itself.
104 Inasmuch as it enables that use to be made by its customers, the role of the online marketplace operator cannot be assessed under Directive 89/104 or Regulation No 40/94 , but must be examined from the point of view of other rules of law, such as those set out in Directive 2000/31 , in particular in s.4 of Chapter II , which concerns the 'liability of intermediary service providers' in electronic commerce and comprises Arts.12 to 15 of that directive (see, by analogy, Google France and Google , para.57).
105 In view of the foregoing, the answer to the eighth question is that the operator of an online marketplace does not 'use' —for the purposes of Art.5 of Directive 89/104 or Art.9 of Regulation No 40/94 —signs identical with or similar to trade marks which appear in offers for sale displayed on its site."

Mr Baldwin was unimpressed. He said at paragraph [55]:

"It is clear from this that if third party sellers were using the Lush mark on their goods and were using the Amazon site merely as an online market place, then Amazon would not be using the mark. But that is not this case. None of the products offered on Amazon bear the Lush trade mark of the Claimants (those that do bear the Lush mark, eg Lush Hair Extensions, do so because they are outside the scope of the Claimants' trade marks)."

He continued at paragraph [57]:

"The facts of the present case are quite different from those in either Google France or in L'Oreal v eBay. In brief, in this case Amazon is both the designer and operator of the search engine and the operations on its site include the three categories referred to in paragraph 15 above. Although it may be wearing different hats when it designs its search engines and sells its goods, I have no doubt that the design of the search engine is carried out in order to maximize the sale of goods from the site. It is this philosophy which has made Amazon the UK's biggest online retailer. Nor do I consider it necessary to distinguish for the purposes of determining liability the three separate categories of sales via the website. In relation to the third category, Amazon may just be an online market place but the items in this category are mixed up with those in the other two categories, and Amazon's involvement in the transactions of these other two categories is more than sufficient for it to be commercially involved in the offering for sale and selling; the display on the website is part of its own commercial communication within paragraph [102] of L'Oreal v eBay. In my judgment this use is much more than merely use in a service consisting of enabling its customers to display on its website signs corresponding to trade marks."

Returning to the question of whether Amazon's use of the word "Lush" in generating the web page complained of affected the functions of the CTM the deputy judge held that Amazon could not be held responsible for the typing in by a customer of the word Lush into its search box (paragraph [58]). However, it could be held liable for its software offering consumers "Lush Bath Bombs" and other products the moment they typed in the letters "Lu". In His Lordship's judment the average consumer was unlikely to know how the software worked and was likely to believe that it was "intended to be helpful to him and is some consequence of other searches that have been carried out". He would conclude that that if he were looking for Lush Bath Bombs on Amazon, he would find them by clicking on that menu item. Mr Baldwin rejected in terms the contention that "the average consumer who was typing Lush into the search box would think that the drop down menu reference to Lush Bath Bombs was a reference merely to products which were similar to or competitive with the Lush product." He concluded at paragraph [75] that

"The use complained of by Lush clearly damages the origin function and the advertisement and investment function of the Lush trade mark....."

Comment
Although I struggle to appreciate the distinction  that Mr Baldwin drew between the first and second complaints I believe his reasoning as a whole will be hard to challenge however inconvenient it may be for Amazon and other on-line retailers.

The only thing that worries me is whether he complicated the issue that he had to resolve by taking as his starting point the 6 point summary that he set out at paragraph [29] of his judgment and I have reproduced in full above.  The real argument was the 6th issue and I suspect that that arose because there was a defence under the Trade Marks Act 1938 that a mark was not being used in a trade mark sense. That was the point that arose in Case C-206/01 Arsenal Football Club v Reed [2002] ECR I-10273, [2002] EUECJ C-206/01, [2003] Ch 454, [2003] 3 WLR 450, [2003] CEC 3 and it was knocked on the head pretty comprehensively by the Court in that reference. It is a particularly English notion that is very attractive but has no real place in the Directive or CTM Regulation.

I suggest that Mr Baldwin could have arrived at the same result more simply and directly by considering the language of art 9 (1) (a) of the CTM Regulation.  In this regard it is interesting to note in passing that throughout his judgment the deputy judge referred not to the Regulation but the Directive even though the case concerned a CTM and not a British trade mark. The wording of the provision is as follows:

"A Community trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
(a)    any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered."

Unlike s.10 (4) the Trade Marks Act 1994 "use" is not defined in the Regulation but paragraph (2) is to similar effect:

"(a) affixing the sign to the goods or to the packaging thereof;
(b) offering the goods, putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder;
(c) importing or exporting the goods under that sign;
(d) using the sign on business papers and in advertising."

To my mind, there is no doubt that Amazon was offering goods within the specification or that it was advertising such goods using that sign within the meaning of art 10 (4) (d). It is true that it did not label those goods "Lush" but it offered them to customers in response to enquiries about Lush products.  Being an unsophisticated North Country lass I don't see a whole heap of difference between software that analyses a customer's on-line behaviour and offers competing products and the substitution by a barman of beverage A for beverage B as in the Showerings cases 40 years ago. I do have some sympathy for the argument that intellectual property rights have to be weighed against consumer interests but that is something for the legislature - in this case the European Parliament and Council - and not the judiciary to fix.

If anybody wants to tick me off for spouting nonsense my phone number is 020 7404 5252 and I can be contacted there during normal office hours. Outside those hours and indeed at any other time you can send me a message at any time through my contact form  You can also tweet me, write on my wall or get in touch through G+, Linkedin or Xing,

What Price for IPO plc's Shares at its IPO?

The Royal Mail's Privatization was too cautious according to the National
Audit Office. Will Vince Cable ask too much for the shares of IPO Plc?

Ever since the announcement by Viscount Younger of Leckie that the Intellectual Property Office is to be privatized, there has been intense speculation in the City as to what the price that the shares will be offered to the public upon the agency's privatization. Originally it was rumoured that the price would be 255p but following the National Audit Office's criticism of the Royal Mail Privatization analysts now believe that it could be set very much higher. A figure of 375p has been suggested by some analysts, especially after the IPO's staff received tempting offers from the Bogof hedge fund.

According to the South Wales Argus and the Western Mail there has been a rush of enquiries for top of the range models at Sytner the luxury car distributor for Newport.  Jewellers and pubs in the town have also noticed an upturn in business.  When I was last last in Newport for a performance by Ballet Cymru I met two of them whom I know only as Lawrence and Gary in The Dragonfly at Lakeside Drive who insisted on plying me with drinks all evening while singing "We're in the Money" somewhat out of tune.

So what sort of business is IPO Plc? According to its latest report and accounts its turnover was nearly £74 million in 2013 which generated an operating surplus of £8.3 million. Renewal fees for British and European patents generated the lion's share of that revenue of over £50 million with trade mark applications providing a further £10 million. Analysts believe that there is scope for developing the publications and commercial services side of the business which contributed only £138,000 and £187,000 respectively in the IPO's last year as a government entity.

Registered Community Designs: Magmatic Ltd v PMS International Ltd

In Magmatic Ltd v PMS International Ltd [2013] EWHC 1925 (Pat) (11 July 2013) Mr Justice Arnold held that PMS International Ltd ("PMS") had infringed registered Community design number 43427-0001 ("the RCD"), some of Magmatic Ltd ("Magmatic")'s design rights and Magmatic's literary copyright in its safety notice. Magmatic appealed to the Court of Appeal on the grounds that the judge fell into error in finding infringement of the RCD in that he had wrongly interpreted the RCD and improperly excluded from his consideration various aspects of the design of Magimax's product. In Magmatic Ltd v PMS International Ltd [2014] EWCA Civ 181 (28 Feb 2014) the Court of Appeal (Lords Justices Moses and Kitchin and Lady Justice Black) allowed the appeal.

The Parties
Magamatic makes and sells ride-on suitcases for children under the trade mark Trunki. Photographs of one of the products in the Trunki range appear in the middle column above.  PMS imports and sells similar products under the trade mark Kiddee Case. Photos of a suitcase in the "Kiddies Case" range appear in the right hand column.  The left hand column consists of representations of the RCD which Magmatic had registered at the Office for Harmonization in the Internal Market ("OHIM") with effect from the 20 June 2003.

The Law
Art 19 (1) of the Community Design Directive (Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs (OJ EC No L 3 of 5.1.2002, p. 1) provides:

"A registered Community design shall confer on its holder the exclusive right to use it and to prevent any third party not having his consent from using it. The aforementioned use shall cover, in particular, the making, offering, putting on the market, importing, exporting or using of a product in which the design is incorporated or to which it is applied, or stocking such a product for those purposes."

This provision begs the question of what precisely is meant by the "Community design" and that question is answered by art 10 (1) which provides that "the scope of the protection conferred by a Community design shall include any design which does not produce on the informed user a different overall impression." The following paragraph adds that

"In assessing the scope of protection, the degree of freedom of the designer in developing his design shall be taken into consideration."

The Proceedings
On 18 Feb 2013 Magmatic sued PMS for infringement of its RCD, design rights and literary copyright. In a typically thorough analysis the judge considered the identity of the informed user, the existing design corpus, design freedom, the effect of design freedom on the scope of protection and the effect of differences between the registered design and the design corpus on the scope of protection. At paragraph [61] he decided that the RCD was entitled to a broad scope of protection as it represented a substantial departure from the design corpus and that the designer had considerable design freedom, Relying on Procter & Gamble Co v Reckitt Benckiser (UK) Ltd [2008] FSR 8, [2008] ECDR 3, [2007] EWCA Civ 936, [2008] Bus LR 801 where Lord Justice Jacob had said at [40] that "the proper comparison is with the shape of the alleged infringement" and that "graphics on that (or on the physical embodiment of the design) are irrelevant" his lordship disregarded the surface decoration on PMS's suitcases.

The Appeal
The Court of Appeal held that Mr Justice Arnold erred in principle in approaching the matter as he did and that he was wrong to disregard all of the decoration on the Kiddee Case. As to the Court of Appeal's previous decision in Procter & Gamble Lord Justice Kitchin said at paragraph [37] that Lord Justice Jacob's observation was entirely right in the context in which it was made but it did not apply to every case. In particular, it did not apply to cases where surface decoration (or the absence thereof) was a feature of the design as was the case in  Samsung Electronics (UK) Ltd v Apple Inc [2012] EWCA Civ 1339 (18 Oct 2012). In disregarding surface decoration, Mr Justice Arnold had fallen into error in two respects:

"The [RCD] consists of six monochrome representations of a suitcase. These representations are not simple line drawings, however. Rather, they are computer generated three dimensional images which show the suitcase from different perspectives and angles and show the effect of light upon its surfaces. Further and importantly, the suitcase looks like a horned animal with a nose and a tail, and it does so both because of its shape and because its flanks and front are not adorned with any other imagery which counteracts or interferes with the impression the shape creates. As [counsel for PMS] submits, the [RCD] is, in that sense, relatively uncluttered and it conveys a distinct visual message. Here then the first of the judge's errors can be seen: he failed to appreciate that this is a design for a suitcase which, considered as a whole, looks like a horned animal."

Secondly, although the judge was right to find that as the representations of the design in the left hand column were in  monochrome the design was not limited to particular colours, he had been wrong to ignore the distinct contrast in colour in the representations between the wheels and the strap, on the one hand, and the rest of the suitcase on the other.  Moreover the wheels and straps of the defendant's cases were the same colour as the rest of the structure.  Because of those differences the Kiddies' Cases did not infringe the RCD.

Comment
This is an important decision on the scope of registered and registered Community design protection. Its guidance on how to analyse representations of registered designs is perhaps comparable to such cases as  Kirin-Amgen, Improver and Catnic on the construction of patent claims. In anchoring the scope of design protection to what is visible in the representation of the design, this case places bounds on what can be claimed in a registered design. As Parliament is about to criminalize registered design infringement for the first time in the long history of design registration, such clarity is to be welcomed.   If you want to discuss this case or have any question on design law, call me on 020 7404 5252 during office hours. You can also tweet me, write on my wall or send me a message me through my contact form, G+, Linkedin or Xing.

Trade Marks: British Shorinji Kempo Federation v Shorinji Kempo Unity

Two interesting points arose in British Shorinji Kempo Federation v Shorinji Kempo Unity [2014] EWHC 285 (Ch) (17 Feb 2014) in which my colleague Thomas Dillon appeared for the British Shorinji Kempo Foundation ("BSKF") on a pro bono basis. The first was what constitutes genuine use for the purpose of s.6A of the Trade Marks Act 1994. The second was the methodology by which the judge determined whether the mark that had BSKF sought to register was similar to one that had previously been registered by Shorinji Kempo Unity ("SKU") and if so whether there was any likelihood of confusion for the purposes of s.5 (2) of the Act.

The Parties
SKU is an entity whose function is to hold the intellectual property rights of the World Shorinji Kempo Organisation ("WSKO"). WKSO had many branches or affiliated organizations around the world. According to WSKO's website, Shorinji Kempo is a Japanese martial art founded in the town of Tadotsu in 1947. The BSKF is an association of organizations which promote the art in the UK, The BSKF had been affiliated to the WSKO for a number of years but was no longer connected with it.

The Mark in Suit

On 21 Jan 2011, BSKF applied to register the following trade mark shown in respect of the following goods and services:

Class 26: Embroidered badges; badges of textile materials.
Class 35: Advertising, management, administration, office functions.
Class 41: Teaching of martial arts, training in martial arts, instruction in martial art.

The Earlier Mark

SKU opposed the application on the 30 Sept 2011 under s.5 (2), (3) and (4) of the Trade Marks Act 1994. It relied on the registration of the following sign as British and Community trade marks for various goods in classes 14, 16, 25, 28, 35, 37 and 41:

The Opposition

The opposition came on before Mr George Salthouse who dismissed it on the ground that there had been no genuine use of the earlier marks for the purposes of s.6A of the Act (see Re The British Shorinji Kempo Foundation's Application, Shorinji Kempo Unity v British Shorinji Kempo Federation (2013 BL O-258-13 20 June 2013)).

The Appeal

SKU appealed to the court under s.76 (2) of the Act.  The appeal came on before Mr. Justice Warren. The judgment does not mention the grounds of appeal or the respondent's response but it does state that both sides were allowed to adduce additional evidence (paragraph [2]).  His Lordship dismissed the appeal at paragraph [69] but on grounds that were different from those of the hearing officer.  The judge found that there had been genuine use of the earlier mark for the purposes of s.6A but the BSKF mark was not similar to the earlier mark, or if that was wrong, that there was no likelihood of confusion for the purposes of section 5(2) of the Act (paragraph [68 (iii)]).

Genuine Use

SKU relied on the following alleged use:

(i) Use by branches affiliated with BSKF itself of marks not identical to the Earlier mark but said to be use of the Earlier mark, such use, it is submitted, being with the consent of WSKO.
(ii) Use on BSKF's own Website.
(iii) Use by another entity, the United Kingdom Shorinji Kempo Federation ("UKSKF") of certain marks which was formed after BSKF had ceased to be affiliated with WSKO.

On the question of whether there had been any consent SKU argued that any use by the BSKF during its affiliation to WSKO was necessarily with its consent since the BSKF was simply an arm of WSKO until it and many of its branches ceased to be affiliated with WSKO. The judge found nothing in that point (see paragraph [25]). However, there was evidence that SKU had expressly consented to the use of the words Shorinji Kempo by students at Durham University and members of the Harrow Shorinji Kempo branch.

Mr Justice Warren adopted Ms Anna Carboni's summary of the law in Sant Ambroeus [2010] RPC 28:

"(1) Genuine use means actual use of the mark by the proprietor or a third party with authority to use the mark: Ansul, [35] and [37].
(2) The use must be more than merely "token", which means in this context that it must not serve solely to preserve the rights conferred by the registration: Ansul, [36].
(3) The use must be consistent with the essential function of a trade mark, which is to guarantee the identity of the origin of the goods or services to the consumer or end-user by enabling him, without any possibility of confusion, to distinguish the goods or services from others which have another origin: Ansul, [36]; Silberquelle, [17].
(4) The use must be by way of real commercial exploitation of the mark on the market for the relevant goods or services, i.e. exploitation that is aimed at maintaining or creating an outlet for the goods or services or a share in that market: Ansul, [37]-[38]; Silberquelle, [18].

(a) Example that meets this criterion: preparations to put goods or services on the market, such as advertising campaigns: Ansul, [37].
(b) Examples that do not meet this criterion:

(i) internal use by the proprietor: Ansul, [37];
(ii) the distribution of promotional items as a reward for the purchase of other goods and to encourage the sale of the latter: Silberquelle, [20]-[21].

(5) All the relevant facts and circumstances must be taken into account in determining whether there is real commercial exploitation of the mark, including in particular, the nature of the goods or services at issue, the characteristics of the market concerned, the scale and frequency of use of the mark, whether the mark is used for the purpose of marketing all the goods and services covered by the mark or just some of them, and the evidence that the proprietor is able to provide: Ansul, [38] and 39]; La Mer, [22] - [23].
(6) Use of the mark need not always be quantitatively significant for it to be deemed genuine. There is no de minimis rule. Even minimal use may qualify as genuine use if it is the sort of use that is appropriate in the economic sector concerned for preserving or creating market share for the relevant goods or services. For example, use of the mark by a single client which imports the relevant goods can be sufficient to demonstrate that such use is genuine, if it appears that the import operation has a genuine commercial justification for the proprietor: Ansul, [39]; La Mer, [21], [24] and [25]."

Applying those principles, the judge held at paragraph [55] that the use of the words Shorinji Kempo on clothing for the students and Harrow members by those branches pursuant to SKU's express consent was sufficient for the purposes of s.6A.

Confusing Similarity

At the start of his judgment (between paragraphs [8] and [15]) Mr Justice Warren had considered whether the words Shorinji Kempo were descriptive of shorinji kempo as an activity or whether they referred exclusively to the WSKO. The judge decided that they were descriptive of the activity. Having decided that point it followed that the only distinctive part were the Japanese characters below the words in Latin script. As the BSKF's mark did not include any of those Japanese characters but words that were descriptive it followed that there was no similarity or, if there was similarity, there was no likelihood of confusion on the part of the public that would includes the likelihood of association with SKU's trade mark.

Comment

This is a useful case for practitioners and covers a number of issues other than those upon which I have focused in this case note such as the circumstances in which use of a mark by an agent can satisfy the requirements of s.6A. It contains some useful analysis of a number of decisions of the Court of Justice of the European Union, the English courts and several appointed persons. For that reason the hearing officer's decision is worth reading as well as that of the judge. Probably the best person to discuss this case is Thomas who can be reached on 020 7404 5252 during normal office hours, though I would be happy to discuss it too and can be called on the same number. If you want to discuss this case or any matter relating to IP law, message me through my contact form, twitter, Facebook, G+, Linkedin or Xing.

"What is meant by "Due Cause" in s.10 (3) of the Trade Marks Act? The Red Bull Case

Amsterdam   Source Wikipedia

According to Wikipedia Red Bull is the most popular energy drink in the world, with 5.2 billion cans sold in 2012. Its manufacturer, Red Bull GmbH, has registered the RED BULL mark has registered those words and their accompanying logo as word and device marks in trade mark registries around the world including the Benelux Office for Intellectual Property ("BOIP"). The company registered that sign with BOIP for non-alcoholic drinks in class 32 with effect from 11 July 1983. After decades of massive sales and extensive advertising nobody could argue that that mark has a reputation within the meaning of art 5 (2) of the Trade Marks Directive (Directive 2008/95/EC of the European Parliament and the Council of 22 October 2008
to approximate the laws of the Member States relating to trade marks OJ 8.11.2008 p 299/25). S.10 (3) of our Trade Marks Act 1994  implements that provision.

There is in the Netherlands a chain of hotels, coffee shops and other establishments retailing a range of other goods and services known as The Bull Dog. The Bull Dog's history including why it chose its trade name which makes fascinating reading can be found on the About Us page of its website. Hendrikus de Vries, the entrepreneur behind The Bull Dog, registered the words ‘The Bulldog’ combined with a a device with BOIP for a range of goods in class 32 on 14 July 1983. Subsequently, he also registered the words "The Bull Dog" as a word mark and the the word and figurative mark ‘The Bulldog Energy Drink’.

On 27 June 2005 Red Bull GmbH sued Mr. de Vries and his company, Leidseplein Beheer BV, in the Rechtbank Amsterdam (Amsterdam District Court) for an order requiring them "to cease production and marketing of energy drinks in packaging that displays the ‘Bull Dog’ sign or any other sign containing the word element ‘Bull’ or any other signs which are confusingly similar to the trade mark registrations of Red Bull." Mr de Vries and his company counterclaimed for the revocation, in respect of the Benelux countries, of Red Bull’s rights in respect of the mark ‘Red Bull Krating‑Daeng’. The Rechtbank threw out the claim on 17 Jan 2007 so Red Bull appealed to Gerechtshof te Amsterdam (Amsterdam Regional Court of Appeal).

The appeal court allowed the appeal holding

"first, that the mark ‘Red Bull Krating‑Daeng’ had a reputation within the Benelux countries and, secondly, that, because of the similarity, consisting in the common word element ‘Bull’, between that mark and the sign ‘The Bulldog’ used by Mr de Vries for energy drinks, the relevant public would make a connection between the trade mark and the sign, even if the two were not mistaken for each other."

The court also found that

the sign ‘The Bulldog’ was similar to the mark ‘Red Bull Krating‑Daeng’ and that Mr de Vries, by riding on the coat - tails of that mark with a reputation, had sought to take advantage of the reputation of that mark with a view to having his share of the energy drinks market held by Red Bull and corresponding to a multimillion euro turnover.

Despite evidence that Mr de Vries had used ‘The Bulldog’ sign before Red Bull had applied to register its mark the Gerechtshof te Amsterdam held that did not constitute "due cause" for allowing the use of that sign. In reaching its decision the appeal court considered itself to be bound by the Benelux Court in Colgate-Palmolive BV v NV Royal Distillery Erven Lucas Bols 1 March 1975.

Mr de Vries and his company appealed to the Hoge Raad der Nederlanden (Netherlands Supreme Court) on the grounds that Bols was no longer good law following the adoption of the Trade Marks Directive and the decision of the Court of Justice of the European Union in Case C‑323/09 Interflora Inc and another v Marks & Spencer Plc [2011] ECR I‑8625.  Accordingly the Dutch court referred the following question to the Court of Justice:

‘Is Article 5(2) of Directive [89/104] to be interpreted as meaning that there can be due cause within the meaning of that provision also where the sign that is identical or similar to the trade mark with a reputation was already being used in good faith by the third party/parties concerned before that trade mark was filed?’

in  its judgment in C‑65/12, Leidseplein Beheer BV, v Red Bull GmbH [2014] EUECJ C-65/12, [2014] WLR(D) 48 the Court interpreted that question as follows at paragraph [20] of its judgment:

"By its question, the referring court asks, in essence, whether Article 5(2) of Directive 89/104 must be interpreted as meaning that the use by a third party of a sign that is similar to a trade mark with a reputation in relation to goods identical to those for which that mark is registered may be considered to be with ‘due cause’, within the meaning of that provision, if it is demonstrated that that sign was being used before that mark was filed."

In their submissions  Mr de Vries argued that the use, in good faith, of a sign that is similar to a mark with a reputation, in the case where that sign was being used before that mark was filed, can be covered by the "due cause" exception.  Red Bull on the other hand contended that that concept covers only objectively overriding reasons.

The Court decided first to determine the scope of the concept of ‘due cause’ before then going on to assess whether, in the light of the finding made in that regard, the use made of a sign similar to a mark with a reputation, before that mark was filed, is liable to come within the scope of that concept in the case where that sign is used in relation to goods or services which are identical to those for which that mark has been registered.

Taking as its starting point the policy of the Directive, the Court held at paragraph [41] that:

" ...... the purpose of Directive 89/104 is generally to strike a balance between the interest which the proprietor of a trade mark has in safeguarding its essential function, on the one hand, and the interests of other economic operators in having signs capable of denoting their products and services, on the other (Case C‑145/05 Levi Strauss [2006] ECR I‑3703, paragraph 29).
42 It follows that the protection of rights which the proprietor of a trade mark derives from that directive is not unconditional, since in order to maintain the balance between those interests that protection is limited, in particular, to those cases in which that proprietor shows himself to be sufficiently vigilant by opposing the use, by other operators, of signs likely to infringe his mark (Levi Strauss, paragraph 30).
43 In a system for the protection of marks such as that adopted, on the basis of Directive 89/104, by the Benelux Convention, however, the interests of a third party in using, in the course of trade, a sign similar to a mark with a reputation must be considered, in the context of Article 5(2) of that directive, in the light of the possibility for the user of that sign to claim ‘due cause’.
44 Where the proprietor of the mark with a reputation has demonstrated the existence of one of the forms of injury referred to in Article 5(2) of Directive 89/104 and, in particular, has shown that unfair advantage has been taken of the distinctive character or the repute of that mark, the onus is on the third party using a sign similar to the mark with a reputation to establish that he has due cause for using such a sign (see, by analogy, Case C‑252/07 Intel Corporation [2008] ECR I‑8823, paragraph 39).
45 It follows that the concept of ‘due cause’ may not only include objectively overriding reasons but may also relate to the subjective interests of a third party using a sign which is identical or similar to the mark with a reputation.
46 Thus, the concept of ‘due cause’ is intended, not to resolve a conflict between a mark with a reputation and a similar sign which was being used before that trade mark was filed or to restrict the rights which the proprietor of that mark is recognised as having, but to strike a balance between the interests in question by taking account, in the specific context of Article 5(2) of Directive 89/104 and in the light of the enhanced protection enjoyed by that mark, of the interests of the third party using that sign. In so doing, the claim by a third party that there is due cause for using a sign which is similar to a mark with a reputation cannot lead to the recognition, for the benefit of that third party, of the rights connected with a registered mark, but rather obliges the proprietor of the mark with a reputation to tolerate the use of the similar sign."

The Court then considered the conditions under which the use by a third party of a sign which is similar to a trade mark with a reputation in relation to goods which are identical to those for which that mark is registered, where that sign was already being used before that mark was filed, may be covered by the "due cause" exception:

"53  In order to determine whether the use by a third party, before a trade mark with a reputation was filed, of a sign similar to that mark may constitute ‘due cause’, within the meaning of Article 5(2) of Directive 89/104, and justify the fact that that third party takes advantage of the repute of that mark, the referring court must carry out an assessment, taking into account, in particular, two factors.
54 In the first place, such an assessment requires a determination as to how that sign has been accepted by, and what its reputation is with, the relevant public. In the present case, it is not disputed that the sign ‘The Bulldog’ has been used for a range of hotel, restaurant and café services since 1983 or before. The date from which Mr de Vries has offered energy drinks for sale is, however, not specified in the order for reference.
55 In the second place, it is necessary to examine the intention of the person using that sign.
56 In this regard, in order to determine whether the use of the sign similar to the mark with a reputation was in good faith, it is necessary to take account of the degree of proximity between the goods and services for which that sign has been used and the product for which that mark was registered, as well as to have regard for when that sign was first used for a product identical to that for which that mark was registered, and when that mark acquired its reputation.
57 First, where a sign has been used prior to the registration of a mark with a reputation in relation to services and goods which may be linked to the product for which that mark has been registered, the use of that sign in relation to that latter product may appear to be a natural extension of the range of services and goods for which that sign already enjoys a certain reputation with the relevant public.
58 In the present case, it is not disputed that Mr de Vries uses the sign ‘The Bulldog’ in relation to hotel, restaurant and café goods and services which include the sale of drinks. Consequently, in the light of the recognition enjoyed by that sign among the relevant public, and in the light of the nature of the goods and services for which it has been used, the sale of energy drinks contained in packaging which displays that sign may therefore be perceived, not as an attempt to take advantage of the repute of the mark ‘Red Bull’, but rather as a genuine extension of the range of goods and services offered by Mr de Vries. That impression would be strengthened even further if the sign ‘The Bulldog’ was used for energy drinks before the mark ‘Red Bull Krating‑Daeng’ acquired its reputation.
59 Secondly, the greater the repute of the sign used, prior to the registration of a similar mark with a reputation, for a certain range of goods and services, the more its use will be necessary for the marketing of a product identical to that for which the mark was registered, a fortiori as that product is close, by its nature, to the range of goods and services for which that sign was previously used.
60 Consequently, it follows from all of the foregoing considerations that the answer to the question referred is that Article 5(2) of Directive 89/104 must be interpreted as meaning that the proprietor of a trade mark with a reputation may be obliged, pursuant to the concept of ‘due cause’ within the meaning of that provision, to tolerate the use by a third party of a sign similar to that mark in relation to a product which is identical to that for which that mark was registered, if it is demonstrated that that sign was being used before that mark was filed and that the use of that sign in relation to the identical product is in good faith. In order to determine whether that is so, the national court must take account, in particular, of:
– how that sign has been accepted by, and what its reputation is with, the relevant public;
– the degree of proximity between the goods and services for which that sign was originally used and the product for which the mark with a reputation was registered; and
– the economic and commercial significance of the use for that product of the sign which is similar to that mark."

Although that decision applies only to cases where the allegedly infringing sign was used before the registration of the mark with a reputation it is submitted that the methodology has a wider application. When a s.10 (3) point arises the following questions should be asked:

1. Is the defendant using in the course of trade in relation to any goods or services a sign which is identical with or similar to the registered trade mark? If no cadit questio, but if yes:
2. Does the registered mark have a reputation in the United Kingdom? If no cadit questio, but if yes:
3. Is the use of the sign taking unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark. If no cadit questio, but if yes the claimant wins unless the defendant can show "due cause".
4. Has the defendant's sign been used before the registration of the mark? If so then paragraph [60] above applies. If not, are there any other circumstances that would objectively justify the use of the sign notwithstanding the unfair advantage or detriment? 

It is perhaps impossible to catalogue all the circumstances in which such use would be justified but consideration of the way the sign has been accepted by the public and the defendant's intention would be relevant factors.

Although it has nothing to do with this case I have to mention that Amsterdam is he home of Ernst Meisner's Junior Company about which I have written screeds in Terpsichore my ballet blog, Clearly Amsterdam is as exciting and creative a place in business as it is in the arts.

If anybody wants to discuss this case or trade mark law in general you can call me on  020 7404 5252 during normal office hours or you can message me through my contact form. You can also tweet me, write on my wall or send me a message through G+, Linkedin or Xing.