"Is the shape of a London taxi a valid registered trade mark?" The London Taxi Corporation v Frazer Nash Research

The New Metrocab

Court of Appeal (Lord Justices Kitchin and Floyd)  The London Taxi Corporation Ltd (t/a The London Taxi Company) v Frazer-Nash Research Ltd and Another  [2017] EWCA Civ 1729 (1 Nov 2017)

In The London Taxi Corporation Ltd (t/a The London Taxi Company) v Frazer-Nash Research Ltd and Another [2016] EWHC 52 (Ch) (20 Jan 2016) Mr Justice Arnold had to decide whether the shape of a London taxi could be registered as a British or European Union trade mark and, if it could, whether such a mark could be infringed by the manufacture and sale of a taxi that looks like the vehicle in the picture above. It should be remembered that art 3 of Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trade marks provides that a trade mark may consist of any signs including the shape of goods providing that such signs are capable of distinguishing the goods of one undertaking from those of other undertakings and can be   "represented on the register in a manner which enables the competent authorities and the public to determine the clear and precise subject matter of the protection afforded to its proprietor."

The Action
The London Taxi Corporation owned two trade marks:
The EU trade mark was represented as follows:-
 and the UK mark as:-

The London Taxi Corporation feared that the launch of the new Metrocab shown in the photo above would infringe its EU and British trade marks and amount to passing off.  It sought injunctions from Mr Justice Arnold to restrain the launch.  Instead of granting the requested relief, his lordship found that both registrations were invalid and revoked one for non-use. He held that even if they were valid the registrations would not be infringed by the manufacture or sale of the Metrocab.  The London Taxi Corporation appealed to the Court of Appeal against Mr Justice Arnold's judgment where the case came before the two intellectual property Lords Justices Kitchin and Floyd.

The Appeal
According to Lord Justice Floyd, there were 26 grounds of appeal but the case turned on the following issues:

"i) Is the average consumer in the present case (a) the taxi driver who purchases the cab or (b) the taxi driver who purchases the car together with members of the public who hire taxis?
ii) Are the trade marks invalid because they are each devoid of distinctive character? This gives rise to two sub-issues: (a) inherent distinctive character and (b) acquired distinctive character.
iii) Are the trade marks invalid because they each consist of a shape which gives substantial value to the goods?
iv) Should the CTM be revoked because of non-use between 30 April 2009 and 1 May 2014?
v) Were the trade marks infringed by the new Metrocab under Articles 9(1)(b)/5(1)(b)?
vi) Were the trade marks infringed by the new Metrocab under Articles 9(1)(c)/5(2)?
vii) Did the respondents have a defence under Article 12(b)/Article 6(1)(b)?
viii) Was the judge correct to dismiss the claim in passing off?"

The Directive and Regulation to which Lord Justice Floyd referred have been repealed and replaced by later legislation in which the numbering of the articles is slightly different. Also, a CTM ("Community trade mark)" is now known as an EUTM ("European Union trade mark"). Although this decision was governed by the previous legislation I shall refer to the current Directive and Regulation and the new terminology for the convenience of my readers.

Who is "the Average Consumer"?
This question arose because arts 5 (1) (b) and 10 (2) (b) of the Directive and the equivalent provisions of the EU Trade Mark Regulation refer to the perception of the public both in relation to the registrability of a mark and whether or not it has been infringed. 

Whenever a hearing officer hears an opposition or invalidity application on the ground that there is an earlier trade mark in relation to which the conditions set out in s.5 (2) of the Trade Marks Act 1994 applies or a judge tries an infringement action under s.10 (2) of that Act, he or she is supposed to apply the principles set out in Sabel BV v Puma AG, Case C-251/95, Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc, Case C-39/97, Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel B.V. Case C-342/97, Marca Mode CV v Adidas AG & Adidas Benelux BV, Case C-425/98, Matratzen Concord GmbH v OHIM, Case C-3/03, Medion AG v. Thomson Multimedia Sales Germany & Austria GmbH, Case C-120/04, Shaker di L. Laudato & C. Sas v OHIM, Case C-334/05P and Bimbo SA v OHIM, Case C-591/12P. One of those principles is that 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. Another is that the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details.  

In Interflora Inc and another v Marks and Spencer plc [2014] EWCA Civ 1403 Lord Justice Kitchin said at paragraph [128] of his judgment that the average consumer was not "some form of mathematical average". Rather, he or she was "a notional person whose presumed expectations are to be taken into account by the national court in assessing the particular question it is called upon to decide".

At trial, it was common ground that the average consumers included taxi drivers but the London Taxi Corporation had been argued that they also included passengers who hired or took rides in taxis. Mr Justice Arnold took the view that passengers were consumers of taxi services but not of taxis. The question was important because there was evidence that at least some passengers would not hire Mercedes Vito taxis because they did not look like traditional London taxis even though they proudly displayed the Mercedes roundel on their radiator grilles.

The trial judge was prepared to accept that "the reactions, or at least the perceived reactions, of the consumers of taxi services to the design of taxis would be taken into account by taxi drivers when deciding which taxi to purchase". However, he also decided that "since taxis were expensive and specialized vehicles, taxi drivers were knowledgeable and careful purchasers" whereas "since taxi services are relatively inexpensive and since consumers are often in a hurry, the level of attention paid by consumers of taxi services was fairly low".

The London Taxi Corporation relied on dicta in Case C-371/02 Björnekulla Fruktindustrier AB v Procordia Food AB [ [2004] EUECJ C-371/02, [2004] ECR I-5791, [2004] ECR I-5971 that:

"24. In general, the perception of consumers or end users will play a decisive role. The whole aim of the commercialisation process is the purchase of the product by those persons and the role of the intermediary consists as much in detecting and anticipating the demand for that product as in increasing or directing it.
25. Accordingly, the relevant circles comprise principally consumers and end users. However, depending on the features of the product market concerned, the influence of intermediaries on decisions to purchase, and thus their perception of the trade mark, must also be taken into consideration."

Lord Justices Kitchin and Floyd did not derive much assistance from that case as it was concerned with the distinction between end-users and intermediaries. However, they reached a different conclusion to that of the trial judge:

"[34] As with all issues in trade mark law, the answer to disputed questions is normally provided by considering the purpose of a trade mark which, broadly speaking, is to operate as a guarantee of origin to those who purchase or use the product. In principle, therefore, and in the absence of any authority cited to us which is directly in point, I would consider that the term average consumer includes any class of consumer to whom the guarantee of origin is directed and who would be likely to rely on it, for example in making a decision to buy or use the goods. Against that background, I would not have thought it mattered whether a user was someone who took complete possession of the goods, or someone who merely hired the goods under the overall control of a third party."
[35] In the present case I cannot therefore see any a priori reason for excluding the hirer of a taxi from the class of consumers whose perceptions it is necessary to consider. The guarantee of origin which the mark provides is directed not only at purchasers of taxis but also at members of the public, such as hirers of taxis. The hirer is a person to whom the origin function of the vehicle trade mark might matter at the stage when he or she hires the taxi. I entirely accept that the hirer is also a user of taxi services, so that any dissatisfaction with the taxi or its performance is likely to be taken up with the taxi driver or his company. But if, for example, the taxi were to fail for reasons not associated with the taxi service, it would be on the manufacturer identified by his trade mark that the hirer would, or might, wish to place the blame. I would be inclined to hold, therefore, that taxi hirers are not excluded in principle from consideration as a relevant class of consumer."

Their lordships did not reach a concluded view on the issue as it did not have a bearing on the outcome of the appeal.

Are the trade marks invalid because they are each devoid of distinctive character? 
It will be recalled that Lord Justice Floyd said that that question gave rise to two sub-issues: whether they were inherently distinctive or whether they had acquired a distinctive character.  The Court of Appeal dealt with the question of inherent distinctiveness first. 

Inherent Distinctiveness
Mr Justice Arnold had approached the issue on the basis that a necessary, but not sufficient, condition for registration in the case of a shape mark was that it should depart significantly from the norm or customs of the sector for products of that kind. He also held that the marks must be perceived by the average consumer as identifying the origin of the goods. Applying those tests, he concluded, first, that the average consumer of taxis would have perceived the registered marks as merely variations of the typical shape of a taxi and that the average consumer of cars would have perceived the marks as mere variations of the typical shape of a car. He also considered that the average consumer would not have perceived the marks as identifying the origin of the goods. Hence they were devoid of distinctive character. 

After considering the decisions of the Court of Justice of the European Union in  Joined Cases C-344/10 P and C-345/10 P Freixenet SA v Office for Harmonisation in the Internal Market (Trade Marks and Designs) [2011] ECR I-10205, [2011] EUECJ C-344/10, EU:C:2011:680, ECLI:EU:C:2011:680 and the General Court in Case T-629/14 Jaguar Land Rover Ltd v Office for Harmonisation in the Internal Market (Trade Marks and Designs) ECLI:EU:T:2015:878, [2015] EUECJ T-629/14, EU:T:2015:878, Lord Justice Floyd held at [45] that there were three steps in deciding whether the mark differs significantly from the norms and customs of the sector. 

"The first step in the exercise is to determine what the sector is. Then it is necessary to identify common norms and customs, if any, of that sector. Thirdly it is necessary to decide whether the mark departs significantly from those norms and customs."

Applying that test he concluded at [50] that the judge was right to hold that the marks in question did not have inherent distinctive character.

Acquired Distinctiveness
It followed that if the shape marks were to have distinctive character they must have acquired it through use. That proved to be the main area of dispute between the parties.

In determining that question, the trial judge applied the test from his own judgment in Société Des Produits Nestlé SA v Cadbury UK Ltd [2016] EWHC 50 (Ch) (20 Jan 2016) [2016] WLR(D) 23, [2016] Bus LR 354. His decision had been considered by the Court of Appeal in Societe Des Produits Nestle SA v Cadbury UK Ltd [2017] EWCA Civ 358 (17 May 2017) and although their lordships had upheld Mr Justice Arnold's decision they substituted their own test for acquired distinctiveness:
"The applicant must prove that, as a result of the use he has made of the mark, a significant proportion of the relevant class of persons perceives the goods designated by that mark, as opposed to any other mark which might also be present, as originating from a particular undertaking. Put another way, the mark must have come to identify the relevant goods as originating from a particular undertaking and so to distinguish those goods from those of other undertakings."

Lord Justice Kitchin had added that " it is not sufficient for the trade mark owner to show that a significant proportion of the relevant class of persons recognize and associate the mark with the trade mark owner's goods. He must show that they perceive that the goods designated by the mark originate with a particular undertaking and no other."

The London Taxi Corporation had criticized the judgment of the court below on the ground that the judge had ignored important evidence of the way in which it had educated the public as to the trade mark significance of the shape. For instance, the advertisements which appeared in pairs on the bottoms of the flip-up seats in the interior of the taxis, visible to passengers in the main seats when the flip-up seats are not occupied that had identified the claimant as the designer and manufacturer of the iconic black cab. 

The Court of Appeal was not persuaded.  As Lord Justice Floyd remarked at paragraph [66]:

"Firstly, one must remember, as always in the case of a shape mark, that the public are not used to the shape of a product being used as an indication of origin. Secondly, even though I would not, as I have said, necessarily exclude hirers as a class of average consumer, they constitute a class of consumer whose focus will be on the provider of the services being supplied more than on the manufacturer of the vehicle in which they are travelling. It will be hard to interest them, far less educate them, in the topic of whether the shape of the taxi is an indication of a unique trade source. Thirdly, the hirer is aware of the regulation of London taxis and that taxis of the shapes shown in the registrations can be relied on to be licensed London taxis. One must be careful therefore to distinguish this message admittedly conveyed to them by the shape, from that which is necessary to show that the mark has acquired trade mark significance."

Their lordships could see nothing in the materials which had been shown to them that persuades them that the judge came to an incorrect conclusion or one with which they could properly interfere.

The Remaining Issues
The finding that the marks had not acquired distinctiveness through use meant that they were invalid and that was enough to dispose of the appeal. Nevertheless, Lord Justice Floyd indicated how the Court would have decided the other six issues.

Substantial Value
Art 4 (1) (e) (iii) of the Directive provides that signs which consist exclusively of the shape, or another characteristic, which gives substantial value to the goods shall not be registered or, if registered, shall be liable to be declared invalid,  Mr Justice Arnold seems to have interpreted the provision as avoiding double protection of a shape through design and trade mark registration:

"Taking all of the factors into consideration, the conclusion I draw is that the shape of the TX1 did add substantial value to the goods. Furthermore, I consider that upholding this objection to the validity of the UKTM would be consistent with the purpose of Article 3 (1) (e) (iii) as explained by the Advocate General and the Court of Justice in Hauck, since it would prevent LTC obtaining a permanent monopoly in respect of the shape of the TX1, rather than a 25-year monopoly by virtue of the registered design."
    Lords Justices Kitchin and Floyd did not see the matter quite so clear cut as that. Lord Justice Floyd indicated at [76] that had it been necessary to decide the issue he would have referred it to the CJEU for a preliminary ruling.

    Revocation for Non-Use
    The trial judge had revoked the EU trade mark on the ground that there had been no genuine use of the mark between 30 April 2009 and 1 May 2010. He reached his conclusion on the basis that there had been no significant sales of the model upon which the registration was based but he did not consider sales of slightly different models. As the Court had concluded that the marks lacked distinctive character, this was necessarily a hypothetical exercise but if they did have a distinctive character, small differences between models were not such as to alter that character. Had it been necessary to decide it Lord Justice Floyd would have concluded that the use of the other models was sufficient to rebut the attack of non-use.

    The claimant relied on art 10 (2) (b) and (c) of the Directive in relation to the British mark and art 9 (2) (b) and (c) of the EU Trade Mark Regulation in relaton to the EU mark. Those articles provide:
    "Without prejudice to the rights of proprietors acquired before the filing date or the priority date of the registered trade mark, the proprietor of that registered trade mark shall be entitled to prevent all third parties not having his consent from using in the course of trade, in relation to goods or services, any sign where:
    (b) the sign is identical with, or similar to, the trade mark and is used in relation to goods or services which are identical with, or similar to, the goods or services for which the trade mark is registered, if there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark;
    (c) the sign is identical with, or similar to, the trade mark irrespective of whether it is used in relation to goods or services which are identical with, similar to, or not similar to, those for which the trade mark is registered, where the latter has a reputation in the Member State 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 trade mark."

    Mr Justice Arnold found against the London Taxi Corporation on both grounds. As to the first, he found sufficient differences between the Metrocab and the registered marks to render confusion unlikely an that finding was upheld by the Court of Appeal. However, the Lords Justices would have allowed the appeal on the second ground had the marks been valid and that is for me the most startling aspect of their lordships' decision.  They would have reached that conclusion by the following route. Had the marks acquired distinctiveness the Lord Justices would have found that they also had a reputation. It was common ground that the Metrocab would be linked to the London Taxi Corporation's taxis and they would have suffered detriment in that their distinctiveness would have been diluted. 

    Art 14 (1) (b) of the Regulation provides:
    "An EU trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade:
    (b) signs or indications which are not distinctive or which concern the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of the goods or services."
    There is a similar in art 8 (b) of the Directive. 
    Mr Justice Arnold would have allowed the defendants to rely on those provisions:

    "Overall, I do not consider that the Defendants' use of sign amounts to unfair competition with LTC. On the contrary, even if it is assumed that there is a likelihood of confusion and/or detriment to the distinctive character of the Trade Marks, I consider that the injury is one that the law should require LTC to tolerate having regard to the nature of the use complained of and the justification for it. Accordingly, the use is in accordance with honest practices. If necessary, therefore, I would hold that the Defendants have a defence under Article 12 (b)/ Article 6 (1) (b)."
    The Court of Appeal disagreed at paragraph [96]:
    "On the assumptions which it is necessary to make at this stage of the analysis, namely that the mark has distinctive character, a reputation, and that there is a likelihood of confusion and/or detriment to the distinctive character of the trade marks, I would for my part consider that a defence under these provisions ought to fail. I do not see why the rights of the registered proprietor of trade marks which, on this hypothesis, convey a clear message about origin, should be trumped because the marks also convey the message that the vehicle is a licensed London taxi. If there are other ways of conveying that second message, which there plainly are, then those ways should be used so as to avoid confusion and detriment to the distinctive character of the mark."
    Passing Off
    The judge below held that the claimant could not show that it had goodwill or a reputation in relations to the marks and that the Metrocab did not misrepresent a connection with the claimant. The Court of Appeal agreed:

    "To my mind, LTC ["The London Taxi Corporation"] faces the same difficulties in establishing the necessary goodwill for the purposes of a passing off action as it did in relation to showing acquired distinctive character the purposes of their trade marks. In addition, as I have already said, the design of the new Metrocab is strikingly different to that of LTC's taxis. I would, accordingly, have reached the same conclusion as the judge."

    Although the London Taxi Corporation lost the appeal it did win some significant victories. The most important of these is that the supply of a similarly shaped product could infringe a shape mark under art 10 (2) (c) if not under art 10 (2) (b) of the Directive and that art 8 (b) afforded no defence. It also won on the revocation point. The appeal highlighted issues upon which preliminary rulings under art 267 of the Treaty on the Functioning of the European Union such as the meaning of art 4 (1) (e) (iii). The Court of Appeal offered handy tests for determining the "average consumer" and whether a mark had acquired distinctiveness through use.

    Should anyone wish to discuss this case or any other point of trade mark law, he or she should call me on 020 7404 5252 during office hours or send me a message through my contact form.


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