Trade Marks and Passing off - Coreix Ltd v Coretx Holdings Plc and Others

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Jane Lambert

Intellectual Property Enterprise Court  Coreix Ltd v Coretx Holdings Plc and others [2017] EWHC 1695 (IPEC) Mr Recorder Campbell QC


This was a claim for trade mark infringement and passing off and an application for the cancellation of CORETX as a UK trade mark. The action was brought by Coreix Ltd. ("Coreix") which was the registered proprietor of the word mark COREIX. The defendants are members of a group of companies that include the word CORETX in their corporate names, have registered CORETX sign as a word mark and supply ICT services under that mark as well as a device mark that includes the word CORETX

The Facts

The third defendant was incorporated in 2004 under the name CONNEXIONS4LONDON LTD. It traded under the mark C4L in relation to telecommunication and computer services. From Nov 2013, it started to use the mark "coreTX" in relation to providing high-performance multiprotocol label switching ("MPLS") networks. The first 4 letters of that mark were in lower case. The company also registered the word 'CORETX' as a trade mark with effect from 14 Nov 2013 in relation to services in Class 38. Coreix was aware of the third defendant' use and registration of those trade marks but did not issue proceedings against that company at that time. In early 2016 the defendant companies decided to adopt the mark "CORETX" and an associated logo for use by their group as a whole.  They formally launched their new mark and logo at a Cloud Expo industry event. The claimant received a copy of an email announcing the launch. It consulted lawyers and objected to to such use within a mere 77 minutes of seeing that email.

The Pleadings

Coreix pleaded that the defendants' use of the CORETX signs in relation to services that were same as or similar to the goods for which its mark had been registered infringed that mark and amounted to passing off. The defendants did not deny that they had used their signs in range to similar services but denied that there was any risk of confusion. They also relied on estoppel and acquiescence. Coreix replied that those defences could not be used in a trade mark dispute adding that even if those defences were available they would not help the defendants.

Trial

The action came on for trial before Mr Recorder Douglas Campbell QC sitting as an enterprise judge. 

The Issues

The issues that Mr Campbell had to decide were whether:

• the defendants' use of the CORETXT mark infringed the claimant's COREIX mark under s.10 (2) and (3) of the Trade Marks Act 1994, 
• there had been passing off, 
• the defendants could rely on any of their equitable defences; and whether 
• their trade mark registration was valid.

Judgment

The recorder decided against the defendants on all four issues.

Whether there had been an Infringement under s.10 (2)

S.10 (2) provides:

"A person infringes a registered trade mark if he uses in the course of trade a sign where because –

(a) the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered, or 

(b) the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered, 

there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark."

The learned recorder remarked that the law on s 10 (2) infringement generally is very familiar and that there was no dispute about it. He reminded himself of the Court of Appeal's judgment in Interflora Inc and another v Marks and Spencer Plc [2014] EWCA Civ 1403, [2015] ETMR 5, [2015] FSR 10, [2015] BUS LR 492, [2014] WLR(D) 473 at para [129] that:

"… in light of the foregoing discussion we do not accept that a finding of infringement is precluded by a finding that many consumers, of whom the average consumer is representative, would not be confused. To the contrary, if, having regard to the perceptions and expectations of the average consumer, the court concludes that a significant proportion of the relevant public is likely to be confused such as to warrant the intervention of the court then we believe it may properly find infringement."

It was not disputed that consumers generally pay more attention to the beginning of marks than the end, that "when a sign consists of both figurative and verbal elements, the verbal elements are generally more distinctive since the average consumer is more likely to refer to the goods in question by quoting their name (ie using the verbal elements)" or that "descriptive elements, or those having a very general meaning, will not be considered to be the distinctive and dominant elements in the overall impression conveyed."

The recorder referred to para [80] of Lord Justice Kitchen's judgment in Maier and another v Asos Plc and another  [2015] FSR 20, [2015] ETMR 26, [2015] EWCA Civ 220, [2016] Bus LR 1063 on the relationship between actual confusion and the likelihood of confusion:

"If the mark and the sign have both been used and there has been actual confusion between them, this may be powerful evidence that their similarity is such that there exists a likelihood of confusion. Conversely, the absence of actual confusion despite side by side use may be powerful evidence that they are not sufficiently similar to give rise to a likelihood of confusion. This may not always be so, however. The reason for the absence of confusion may be that the mark has only been used to a limited extent or in relation to only some of the goods or services for which it is registered, or in such a way that there has been no possibility of the one being taken for the other. So there may, in truth, have been limited opportunity for real confusion to occur."

He also mentioned Lord Justice Floyd's guidance on the subject in Bayerische Motoren Werke Aktiengesellschaft v Technosport London Ltd and another : [2017] EWCA Civ 779 at para [24]:

"I also think the judge was wrong to say that it required evidence of actual consumers to establish BMW's case. Where what is in issue is an ordinary consumer product the court is not normally assisted by the evidence of individual consumers to establish what impression is conveyed by a sign: see Interflora I [2012] EWCA Civ 1501 at [40] - [43]. The court has to make its own assessment, taking into account all relevant circumstances. Although Miss Scott identified some respects in which the evidence from BMW's employees might have been improved, she was not able to identify what additional evidence from consumers the judge could legitimately have had in mind. She accepted that evidence of actual confusion is never a pre-requisite of success in an infringement or passing off action."

The defendants had referred to JW Spear & Sons Ltd v Zynga Inc : [2014] BUS LR 148, [2013] EWCA Civ 1175 to show that the mark SCRAMBLE was held not to infringe SCRABBLE even though only one letter is different. Mr Campbell did not find any assistance in that case because:

"the facts in that case were different. First, SCRABBLE was a very well known trade mark (which according to CJEU law generally makes confusion more likely), and SCRAMBLE had a descriptive allusion. Secondly there was "extensive and pervasive" side by side use such that any confusion should have come to light by the time of trial. Both of these were reasons which the Court of Appeal held supported the finding that there was no risk of confusion in that case: see [160]-[161], [187]-[188]."

The recorder noted that there was no dispute that the CORETX sign was used in relation to services that are identical to those for which the COREIX mark is registered. There was no dispute that the average consumer was "an experienced business person with knowledge of or experience in information technology and who is obtaining services for his/her own business or their employer's business" though "allowances still have to be made for imperfect recollection" 

Visually, he found the CORETX word mark to be almost identical to the COREIX mark. There were some distinctive features in the logo but his overall conclusion was that the logo was also visually similar to the registered mark though not as similar as the word mark. Aurally, the recorder noted that the words have an identical first syllable (CORR) and an identical finish (X) and that whatever the difference in the middle, the respective words were highly aurally similar. The logo was also aurally similar since the "MANAGE CONNECT PROTECT" words are merely descriptive.

Mr Campbell also found conceptual similarity for the following reasons:

"i) There is a common element of CORE at the beginning, and whatever this is taken to mean will be the same in each case.

ii) It was common ground on the evidence that TX was widely regarded as an abbreviation for "transmit" in relation to data transmission. The Defendants also alleged, and the Claimant did not dispute, that IX was commonly understood to stand for "information exploitation" or "internet exchange". The Claimant submitted that IX was thus also related to data transmission and the Defendants did not dispute this either."

The recorder found that the COREIX mark was inherently highly distinctive when used in relation to the services for which it had been registered because it "is an invented word which makes no more than a vague conceptual hint or allusion to the services for which it is registered."  He also accepted the following evidence that the mark had acquired distinctiveness through use:

"a. Between 2003 and August 2013 the Claimant had generated a total turnover of trade conducted under or by reference to the mark of around £15million. Its annual turnover in 2012-2013 was around £3 million. Around ¾ of this trade was is in the UK. None of this was challenged.
b. The Claimant spent just under £30k on marketing and promotion of its mark in 2008, rising to just over £60k in 2013 (much of which was online). The Claimant also attended a number of trade shows and conferences to promote its business under the mark. None of this was challenged either, nor was it said to be trivial.
c. The Claimant has received a number of glowing testimonials and high ratings from the users of its service on various industry websites, including www.serchen.co.uk and Web Hosting Talk. I was shown a number of such testimonials and ratings and in particular was shown that the Claimant was referred to simply as "Coreix". The Defendants did not suggest these reviews were unrepresentative.
d. The Claimant also referred to the fact it has been nominated for and has won a number of industry awards. It is true that some of the reviews and awards post-dated 2013, although not all of them. The Claimant made the point that even those which did post-date 2013 reflected historic performance by the Claimant."

It followed that Coreix could rely on both inherent and acquired distinctiveness in support of its case under s 10 (2).

There was also some evidence of actual confusion in that parcels intended for the claimant had gone to the defendant and that visitors to trade shows had confused the two.

For all these reasons, Mr Campbell had no doubt that there was a likelihood of confusion including a likelihood of association with the registered mark.

Whether there had been Infringement under S.10 (3)

That section provides:

"A person infringes a registered trade mark if he uses in the course of trade in relation to goods or services a sign which -
(a) is identical with or similar to the trade mark,
...........................................................................
where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark"

In Comic Enterprises Ltd v Twentieth Century Fox Film Corporation  [2016] FSR 30 [2016] EWCA Civ 41, the Court of Appeal had held that there are no less than 9 requirements which a claimant has to satisfy though not every factor has to arise in every case.  In this case, the issues were 

(a) whether the claimant's mark has a reputation in the relevant territory 

(b) whether it gave rise to a link between the sign and the trade mark in the mind of the average consumer 

(c) whether it gave rise to one of three types of injury, commonly referred to as dilution, tarnishing, or free-riding respectively 

(d) whether the defendants' use was without due cause. 

As regards the type of injury, the Coreix relied primarily on dilution but also on tarnishing and free-riding.

As to the reputation requirement, Mr Justice Arnold had held in Red Bull GmbH v Sun Mark Ltd and Another [2012] EWHC 1929 that it was not particularly onerous.  With regard to injury, the Court of Appeal had held in Comic that 

"the law requires evidence of a change in the economic behaviour of the average consumer of the goods or services for which the earlier mark was registered consequent on the use of the later mark, or a serious likelihood that such a change will occur in the future. A serious risk of detriment can be established by logical deductions, but any such deduction cannot be supposition and must instead be founded properly on all the circumstances of the case and the nature of the trade in issue."

On the first issue, the recorder held that the COREIX mark had a reputation in the UK for the reasons set out in relation to acquired distinctiveness above. His finding was reinforced by the evidence of actual confusion. If that mark did not have any reputation, there would not have been any actual confusion.  As to the second, the defendants' use of the CORETX signs provided the link between those signs and the claimants in the mind of the average consumer.  On the third, the evidence of actual confusion for the purposes of s.10 (2)  and the swamping of its mark was ample evidence of a change in the average consumer's economic behaviour. However, Mr Campbell was not persuaded that there had been any free riding.  The judge considered the "due cause" issue with the estoppel defence which he rejected.  He, therefore, concluded that there had been infringement under s.10 (3) as well as s.10 (2).

Passing off

Mr Campbell found that there had been passing off ar para [95]:

"In my judgment the Claimant has a goodwill in its mark for the same reasons as I set out above in relation to the acquired distinctiveness and reputation of its mark. There is a misrepresentation by the Defendants (in relation to both the word CORETX and the CORETX logo) for the same reasons that there is a likelihood of confusion under s 10(2), and damage will occur for the reasons set out in relation to dilution under s 10(3). I do bear in mind that the legal tests are different but the Defendants did not give any reasons as to why these conclusions on passing off would not follow from conclusions I reached on the trade mark case. Indeed the Defendants themselves positively urged me to reach the same conclusions on both causes of action, and for the same reasons. Their position was that if they won on both s 10(2) and 10(3) they should win on passing off."

Equitable Defences

The Defendants relied on estoppel by convention, estoppel by representation, and acquiescence. The learned recorder referred to Habib Bank Limited v Habib Bank AG Zurich [1981] 1 WLR 1265, 1285 and Electrolux v Electrix No. 2 (1954) 71 RPC 23 and reminded himself that a clear distinction has to be drawn between mere acquiescence or inaction on the one hand, and encouragement or the creation of expectation on the other.

The claimant relied on Mr Justice Males's decision in  Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd and Another [2016] ETMR 32 that no estoppel defence was available as a matter of European trade mark law. That is because the issue of consent could not be a matter for the national laws of member states following Zino Davidoff v A & G Imports [2002] Ch 109. Estoppel was a rule of national law which operates as a kind of deemed consent regardless of actual consent: see [90]-[92].

Mr Campbell felt bound to follow Marussia in the absence of any compelling argument to the contrary. It followed that the equitable defences could not be a defence to a trade mark case but they could to a claim for passing off. The defendants had argued that Coreix had tolerated their use of the CoreTX mark and had even done business together.  He was not persuaded that either circumstance prevented the claimant from enforcing its rights. 

Other Issues

There were a number of smaller issues connected with the use of the defendants' domain names and the position of the defendant Mimic Ltd. which had once been a member of the defendants' group but was now in different hands.  As the domain names incorporated CORETXT the trade mark the recorder concluded that their use was a further infringement of Coreix's mark. In the absence of any evidence of actual infringement or passing off Mr Campbell declined to make a finding of trade mark infringement or passing off by Mimic Ltd.

Cancellation of the CORETX mark

The facts and arguments supporting an application for a declaration of invalidiy under s.5 (2), (3) and (4) of the Trade Marks Act 1994 were exactly the same as those for infringement under s.10 (2) and (3) and passing off.  The recorder held at [107]:

"The comparison here is between D3's mark as registered (namely CORETX in capitals) and the Claimant's mark as registered (in relation to 5 (2), 5 (3)) and used (in relation to 5 (4)). The services of D3's mark are identical to those for which the Claimant's mark has been registered or used as the case may be. In particular these services are all within the telecommunications services of class 38. All 3 grounds of attack succeed and D3's registered trade mark is invalid."

Summary

Mr Recorder Campbell held as follows at [111]:

"i) The action succeeds on each of ss 10(2) and 10(3) of the Trade Marks Act 1994, and passing off.
ii) The defences of acquiescence and estoppel fail.
iii) D3's registered trade mark no. 3 030 562 is invalid."

Comment

In view of the similarity between the COREIX mark and the CORETX sign and the use of that sign in relation to the services for which the COREIX mark had been registered, the outcome of this case is unsurprising. This is a very thorough and well-documented judgment. While it is unlikely to be cited as an authority in its own right for s.10 (2), s.10 (3) and passing off cases, it will undoubtedly be mined for authorities on all those issues. The only issue that is in any doubt is whether Mr Justice Males's judgment in Marussia is right and, if it is, whether it applies to national trade marks. That judgment is believed to be under appeal.

Readers who wish to discuss this case or trade marks generally should call me on +44 (0)20 7404 5252 during office hours or message me through my contact form.