07 February 2012

Community Trade Marks: Specsavers v ASDA

Specsavers (Specsavers International Healthcare Ltd., Specsavers BV, Specsavers Optical Group Ltd and Specsavers Optical Superstores Ltd) are a group of companies which offer glasses, contact lenses and the like at competitive prices.

Specsavers' Trade Marks
Specsavers have registered the following Community trade marks:

(1) 1321298 and 3418928
The word mark SPECSAVERS
("the word mark");

(2) 449256 and 1321348







("the shaded logo mark");

(3) 5608385








("the unshaded logo mark"); and

(4) 1358589







("the wordless logo mark")

The Claim
Specsavers brought an action for trade mark infringement and passing off against the supermarket chain ASDA (Asda Stores Ltd.) for the use of the following marketing materials:

(1) the ASDA Opticians' logo






as used in posters:




















(2) the following bill board:










and

(3) this leaflet:













ASDA's Counterclaims
ASDA denied infringement and passing off and counterclaimed for revocation of the wordless mark on the ground of non-use.

It also had a counterclaim for breach of confidence because a document containing ASDA's plans to re-launch its in-store opticians somehow fell into Specsavers' hands. Spesavers circulated it among their senior executives who devised a spoiler campaign to coincide with ASDA's launch.  Specsavers admitted breach of confidence before trial.  The only significance was that it disqualified Specsavers from moralizing too heavily  as the trial judge Mr. Justice Mann said at paragraph [4] of his judgment in Specsavers International Healthcare Ltd. and Others v Asda Stores Ltd. [2010] EWHC 2035 (Ch) (30 July 2010), [2011] FSR 1. I shall resist conjuring an image of canine cannibalism though ailurophile bloggers might not.

The Trial
The trial judge found that the strapline "Be a real spec saver at ASDA" infringed the word mark under art 9 (1) (c) of the Community Trade Mark Regulation (Council Regulation (EC) No 207/2009 of 26 Feb 2009 on the Community trade mark) but otherwise threw out the claim.  He also revoked the wordless logo mark for non-use.

The Appeal
Specsavers appealed to the Court of Appeal.  ASDA cross-appealed against the judge's finding of infringement of the word mark in respect of the "Be a real spec saver at ASDA" strapline.

The appeal was heard by a very strong court consisting of Lord Justice Kitchin, Sir John Thomas, the President of the Queen's Bench Division and Lady Justice Black (see Specsavers International Healthcare Ltd and Others v Asda Stores Ltd [2012] EWCA Civ 24 (31 Jan 2012)). The Court found that:
(1) the strapline "Spec savings at ASDA" infringed the word mark and the shaded and unshaded logo marks under art 9 (1) (c); and
(2)  the Asda logo infringed the shaded and unshaded logo marks under the same provision..

The Court dismissed Specsavers' appeal in respect of the allegations that ASDA's straplines and logo infringed the word mark and shaded and unshaded logo marks under art 9 (1) (b) as well as ASDA's cross appeal.

They also referred the following questions to the Court of Justice of the European Union ("CJEU"):
"A. Where a trader has separate registrations of Community trade marks for
(i) a graphic device mark;
(ii) a word mark;
and uses the two together, is such use capable of amounting to use of the graphic device mark for the purposes of Article 15 of Regulation 40/94? If yes, how is the question of use of the graphic mark to be assessed?
B. Does it make a difference if:
(i) the word mark is superimposed over the graphic device?
(ii) the trader also has the combined mark comprising graphic device and word mark registered as a Community trade mark?
C. Does the answer to A or B depend upon whether the graphic device and the words are perceived by the average consumer as (i) being separate signs; or (ii) each having an independent distinctive role? If so, how?
D. Where a Community trade mark is not registered in colour, but the proprietor has used it extensively in a particular colour or combination of colours such that it has become associated in the mind of a significant portion of the public (in a part but not the whole of the Community) with that colour or combination of colours, is the colour or colours in which the defendant uses the sign complained of relevant in the global assessment of (i) likelihood of confusion under Article 9(1)(b) or (ii) unfair advantage under Article 9(1)(c) of Regulation 40/94? If so, how?
E. If so, is it relevant as part of the global assessment that the defendant itself is associated in the mind of a significant portion of the public with the colour or particular combination of colours which it is using for the sign complained of?"
The Issues
At trial, Mr. Justice Mann had found that ASDA had created deliberately the materials to which Specsavers objected for use in a marketing campaign to undercut Specsavers. As Lord Justice Kitchin noted at paragraph [19] of his judgment:
"These ideas were developed in early 2009 and, on 1 April, a presentation was made to Mr Bendel. His message to the team was clear, that they should focus on Specsavers. As the judge found, Mr Bendel told Mr Langrish-Dixon that if Asda was to offer better value than Specsavers then they should "shout about it" and let customers know where they could get the best value. Mr Bendel decided that the team should concentrate on price, and not the other pillars and, as the judge recorded at [28], an internal e-mail noted after the meeting:
'We should market the truth - if we are cheaper than Specsavers and our range is as good then that's what we should market.'
From this point, the judge held, the plans for the campaign had an eye on Specsavers."
The questions or the Court were whether Mr. Justice Mann had been right to conclude that ASDA's advertising fell short of infringement under art 9 (1) (b) and that only the strap line "Be a real spec saver" overstepped the mark with art 9 (1) (c).

The Art 9 (1) (b) Point
Art 9 (1) (b) of the CTM Regulation provides:
".................. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:
.............................................................
(b) any sign where, because of its identity with, or similarity to, the Community trade mark and the identity or similarity of the goods or services covered by the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark."
This provision is very similar to s.10 (2) of the Trade Marks Act 1994 and, of course, s.5 (2) of the same statute.

In all of those provisions the key considerations is the likelihood of confusing including the likelihood of association with the complainant's mark. The Court of Justice of the European Union has addressed this issue in a number of cases which Lord Justice Kitchin catalogued at paragraph [51] of his judgment.  Over the years, the hearing officers of the Trade Marks Registry of the Intellectual Property Office have developed a set of guidelines for dealing with oppositions under s.5 (2) and applications for declarations of invalidity under s.47 (2) (a) which have been derived from these decisions. Lord Justice Kitchin endorsed the hearing officers' guidelines at paragraph [52]: 
"(a) the likelihood of confusion must be appreciated globally, taking account of all relevant factors;
(b) the matter must be judged through the eyes of the average consumer of the goods or services in question, who is deemed to be reasonably well informed and reasonably circumspect and observant, but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question;
(c) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;
(d) the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements;
(e) nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components;
(f) and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark;
(g) a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa;
(h) there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;
(i) mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient;
(j) the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense;
(k) if the association between the marks causes the public to wrongly believe that the respective goods [or services] come from the same or economically-linked undertakings, there is a likelihood of confusion."
There was no dispute that Mr. Justice Mann had considered those guidelines but Specsavers argued that he had not applied them correctly.

First, they argued that the judge had fallen into error by not simply comparing the words "spec saver" and "Spec savings" with the mark SPECSAVERS. Had he done that a finding of infringement under art 9 (1) (b) would have been inevitable. The Court rejected that argument.  Such a comparison may have sufficed under the 1938 Act but the CJEU had held in Case C-533/06 O2 Holdings Ltd, O2 (UK) Ltd v Hutchison 3G Ltd [2008] ECR I-4231 that "Art.5(1)(b) of Directive 89/104 is to be interpreted as meaning that the proprietor of a registered trade mark is not entitled to prevent the use, by a third party, in a comparative advertisement, of a sign similar to that mark in relation to goods or services identical with, or similar to, those for which that mark is registered where such use does not give rise to a likelihood of confusion on the part of the public". Lord Justice Kitchin concluded at paragraph [87] that 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."
Mr. Justice Mann had addressed the issue correctly as the average consumer would see the signs "spec saver" and "Spec savings" in the context of the straplines and, indeed, the posters and other materials on which they were used as a whole..

The Court was more sympathetic to Specsavers' second point which related to the device marks.   Specsavers submitted that the judge fell into error in not attaching any particular significance to ASDA's use of a similar colour. The Court considered that the law on this issue was not clear and that its resolution would require a reference to the CJEU. Although such a reference was not necessary for deciding the appeal in respect of the word and shaded logo and unshaded logo marks, it was necessary for the resolution of the appeal in relation to the wordless logo mark.  As for the word and shaded and unshaded logo marks the Court upheld Mr. Justice Mann's decision because the differences in design and the context in which those devices appeared could not reasonably have caused confusion on the part of a circumspect consumer.

Specsavers' third complaint was that the judge fell into error as a matter of principle in failing to take account of the cumulative effect of the straplines and the Asda logo.  At paragraph [115] of his judgment, Lord Justice Kitchin drew a distinction between a defendant who takes a conscious decision to "live dangerously" and one who intends to cause deception and deliberately seeks to take the benefit of another trader's goodwill:
"It has long been established that if it is shown that a defendant has deliberately sought to take the benefit of a claimant's goodwill for himself the court will not "be astute to say that he cannot succeed in doing that which he is straining every nerve to do": see Slazenger & Sons v Feltham & Co (1889) 6 RPC 531 at p.538 per Lindley LJ. A trader who has taken the decision to live dangerously is in a different position, however. He has appreciated the risk of confusion and has endeavoured to adopt a sign which is a safe distance away. All must depend upon the facts of the particular case. Further, it must be kept firmly in mind that the ultimate question whether or not the similarity between the trade mark and the sign is such that there exists a likelihood of confusion is one for the court to determine in the light of its global assessment of all material factors, of which the intention of the defendant, as a person who knows the market in which he is offering his goods or services, is only one."
In the Court of Appeal's view the trial judge had carried out such global assessment correctly. Mr. Justice Mann had considered that the evidence of ASDA's "living dangerously" did not, in the circumstances of this case, amount to evidence of an intention to confuse. ASDA had no wish for consumers to confuse one business for the other and so the judge held its intention and conduct could not be relied upon as evidence of a propensity to confuse. The Lords Justices were entirely satisfied that the judge was entitled to reach this conclusion in the light of the evidence as a whole.

For all of these reasons, the appeal on the art 9 (1) (b) point failed.

The Art 9 (1) (c) Point
Art 9 (1) (c) of the CTM provides:
"....................... The proprietor shall beand  entitled to prevent all third parties not having his consent from using in the course of trade:
.........................................
(c) any sign which is identical with, or similar to, the Community trade mark in relation to goods or services which are not similar to those for which the Community trade mark is registered, where the latter has a reputation in the Community and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the Community trade mark."
For many years it was thought that this provision applied only where the goods or services for which the mark was registered were dissimilar from those used under the offending sign (see paragraph [54] of Simon Thorley QC's judgment in Pfizer Ltd. and another v Eurofood Link (UK) Ltd. 10 Dec 1999 (unreported)). Indeed, s.10 (3) of the Trade Marks Act 1994 which implemented the corresponding provision of the Trade Marks Directive contained the words originally contained a paragraph (b) which contained the words "is used in relation to goods or services which are not similar to those for which the trade mark is registered." These words were deleted by reg. 7 (2) of The Trade Marks (Proof of Use, etc.) Regulations 2004 (S1 2004 No 946) following the CJEU's decision in C292/200 Davidoff & Cie. and Another v Gofkid Ltd [2003] EUECJ C-292/00, [2003] ECR I-00389, [2003] ECR I-389. 

Once the requirement of dissimilarity was removed, the question of the degree of similarity that is required between the registered mark and the infringing sign arose.  That was answered by the CJEU in C408/01 Adidas-Salomon AG and another v Fitnessworld Training Ltd.  [2003] ECR I-12537, [2004] FSR 21, [2003] EUECJ C-408/01, [2003] ECR I-2537, [2004] 1 CMLR 14, [2004] 2 WLR 1095, [2004] Ch 120, [2004] CEC 3, [2004] ETMR 10 and C252/07 Intel Corp. Inc. v CMP United Kingdom Ltd.   [2009] Bus LR 1079, [2009] ETMR 13, [2009] RPC 15, [2008] EUECJ C-252/07, [2008] ECR I-8823. As Lord Justice Kitchin explained:
"[121] The fact that, for the average consumer, who is reasonably well informed and reasonably circumspect, the sign would call the registered mark to mind is tantamount to the existence of such a link: Case C-252/07 Intel Corporation Inc v CPM United Kingdom Ltd [2008] ECR I-8823 at [60].
[122] In addition, it must be shown that the use of the sign without due cause takes or would take advantage of, or is or would be detrimental to, the distinctive character or repute of the registered mark. Thus the three types of injury against which Article 9(1)(c) ensures protection are first, detriment to the distinctive character of the registered mark; second, detriment to the repute of the mark; and third, unfair advantage being taken of the distinctive character or repute of the mark: Intel Corporation at [27].
[123] Importantly, in the absence of such a link in the mind of the public, the use of the sign is not likely to cause one of these three types of injury. But nor is the existence of such a link sufficient, in itself, to establish that there is such an injury: Intel Corporation at [31]-[32]; and [67]-[71]."
The complaint against ASDA was that of "free riding", that is to say taking unfair advantage of the distinctive character or repute of the Specsavers mark.  After reviewing C87/07 L'Oréal SA and others v Bellure NV and others [2010] Bus LR 303, [2009] EUECJ C-487/07, [2010] RPC 1, [2009] ECR I-5185, [2009] ETMR 55 the learned Lord Justice concluded at paragraph [141] that "a proprietor of a trade mark with a reputation is not necessarily entitled to prohibit the use by a competitor of his mark in relation to goods for which it is registered even though the mark has been adopted with the intention and for the purpose of taking advantage of its distinctive character and repute, the competitor will derive a real advantage from his use of the mark, and the competitor will not pay any compensation in respect of that use." Consideration, he added, must be given to whether the use is without due cause. The use of a trade mark as a keyword in order to advertise goods that are an alternative to, but not mere imitations of, the proprietor's goods in a way which does not cause dilution or tarnishing or affect the functions of the trade mark is fair competition and cannot be prohibited.

In its cross-appeal ASDA challenged the trial judge's finding that "Be a real spec saver at ASDA" infringed the word mark on the ground that he had applied rules derived from a case on cheap knock-offs to a situation where ASDA was merely alluding to Specsaver's trade mark in order to prompt consumers to compare ASDA's glasses with Specsavers'. If ASDA could not do that how could there ever be comparative advertising?  The problem with that argument was that ASDA did not comply with any of the conditions of the Comparative Advertising Directive.  The cross-appeal was therefore dismissed.

The Court allowed Specsavers' appeal on the "Spec savings at ASDA" strap line for two reasons.  First, the judge had not compared the aural, visual and conceptual similarities between the word mark and the words "Spec savings" in the strap line:
"But in my judgment the judge fell into error in concluding that the one was some significant distance from the other and in this regard I believe he focused unduly at [174] on the differences between the first and second straplines. Had the judge considered, as he was bound to do, the visual, aural and conceptual similarities between the sign "Spec savings" and the mark "Specsavers" he would have found that they are very similar to each other. Visually they are closely related, to the ear one can easily be taken for the other and conceptually they convey the ideas of spectacles and value. Despite the context of the second strapline as a whole which, I accept, would dispel the likelihood of confusion as to origin, I believe that the average consumer seeing this strapline would make a connection with Specsavers. I am confirmed in this view by the fact that this was Asda's intention. As the judge himself found in the passages to which I have referred at [49] to [50] above, the second strapline contained a reference to Specsavers; the reference was intentional; and Asda was attempting to convey its price message, that is to say it offered better value than Specsavers. These findings were amply supported by the evidence before the judge as to the conception and development of the whole campaign."
Secondly, the trial judge had been wrong to find that there was no "unfair advantage" without "due cause".  As Lord Justice Kitchin put it at paragraph [154]:
"Once it is recognised that the use of the second strapline did create a link with Specsavers it seems to me to be clear that it also used the concept of Specsavers as a value provider and that such use inevitably gave Asda a marketing advantage. Was this advantage unfair and obtained without due cause? I believe it was. This is not a case of legitimate comparative advertising or of one trader simply offering alternatives to the goods or services of another trader through something akin to the Adwords service. Asda intended to benefit from the power of attraction attaching to the Specsavers brand and to exploit, without paying any compensation, Specsavers' marketing efforts by conveying to consumers that Asda offered real value in the form of spectacle savings. I believe that a finding of infringement of the Word marks under Article 9(1)(c) should have followed; as should a finding of infringement of the Shaded and Unshaded logo marks, each of which includes the word Specsavers."
Applying the same test, the Court found that the ASDA logo infringed Specsavers' shaded and unshaded logo marks:
"In assessing whether the use of the Asda logo has taken unfair advantage of the distinctive character or repute of the Specsavers Shaded and Unshaded logo marks it is of course necessary to carry out a global assessment. So I must also have regard to all relevant circumstances, including the significant reputation attaching to Specsavers' marks, the fact that the goods are identical and the fact that it was Asda's intention to target this campaign at Specsavers and to convey the message that Asda offered good, if not better, value. Taking all these matters into account I am satisfied that the use of the Asda logo (in both its forms) as part of the campaign including the straplines was such as to create a link with Specsavers Shaded and Unshaded logo marks in the mind of the average consumer; that this link did confer an advantage upon Asda; and that this advantage was unfair and without due cause. As in the case of the straplines, the use of the Asda logo permitted Asda to benefit from the power of attraction, reputation and the prestige attaching to Specsavers and its Shaded and Unshaded logo marks and to exploit without paying compensation the marketing efforts which Specsavers has made."
The Court declined to make a finding on whether the wordless logo mark had been infringed until after it had received some guidance from the CJEU as to whether use of a mark as a component of another mark counts for the purposes of art 15 of the CTM Regulations.

The Non-use Point
On that point there are two apparently conflicting decisions from the CJEU:
The contest in which the point arose was that the wordless logo mark had only been used on its own in a board game called "Eyedentity" where players have to associate logos with brand names.  That had not impressed Mr Justice Mann and it did not impress the Court of Appeal.   However, the wordless logo mark had been a component of the unshaded and arguably shaded logo marks,.

Conclusion
The importance of this case lies in Lord Justice Kitchin's elegant formulation of the principles for determining liability under 9 (1) (c) of the Directive or s.10 (3) of the Trade Marks Act.   Essentially, these are as follows:
(1)   Is the similarity between the registered mark and the allegedly infringing sign such as to create a link in the minds of consumers between the sign and mark?
(2)  If so, is any advantage derived from such link?
(3)  If so, was such advantage unfair?
(4)  If so, was it without due cause.
Though only obiter, it would appear that compliance with the conditions for the Comparative Advertising Directive would meet the fairness and due cause requirements.

Further Information
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