Branding - Student Union Lettings Limited v Essex Student Lets Limited

University of Leicester

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Jane Lambert

Intellectual Property Enterprise Court (Miss Recorder Michaels) Student Union Lettings Limited v Essex Student Lets Limited [2018] EWHC 419 (IPEC) (7 March 2018) 


This was an action for trade mark infringement and passing off.

The Mark
The mark alleged to have been infringed was the word SULETS.  It was registered as a trade mark under registration number UK00003101453 with effect from 27 March 2015 for the following services:

Class 36: "Accommodation letting agency services; property management services; property leasing services; land management and leasing services; advisory services in relation to all the aforesaid"
Class 37: "Property development (construction) services; property renovation, repair and maintenance services; property cleaning services; advisory services in relation to all the aforesaid"

The Claimant
The registered proprietor of that mark was Student Union Lettings Ltd. ("SUL") which describes itself as "a not-for-profit organisation"owned by the students unions of the University of Leicester and De Montfort University at Leicester.  SUL offers a letting service to students at those universities under the following sign:

The Defendant
The defendant was Essex Student Lets Limited {"ESL") which is another student accommodation service.  It is owned by the students union of the University of Essex .

The Dispute
The dispute arose because ESL re-branded its business as SU LETS using the following sign:

After receiving a letter before claim from SUL's trade mark attorneys, ESL changed its sign to

 SUL sued ESL for trade mark infringement under s.10 (1) and (2) of the Trade Marks Act 1994 and passing off. ESL denied infringement and relied on s.11 (3) of that Act as a defence to the trade mark infringement claim.

Issues
At the case management conference the court ordered the following issues to be tried:

• Did ESL infringe SUL's mark pursuant to s.10 (1) of the Act?
• Did it infringe that mark pursuant to s.10 (2) of the Act?
• Can ESL rely on the s.11 (3) Defence?, and
• Did ESL pass off its business as and for SUL's?

There was no counterclaim for cancellation of SUL's mark even though ESL contended at trial that the mark was "broadly descriptive of student letting services."

The Trial
The action came on for trial between Miss Recorder Michaels.  The learned recorder addressed each of the above issues in turn.

Did ESL infringe the Mark pursuant to s.10 (1) of the Act?

S.10 (1) of the Trade Marks Act 1994 provides:

"A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered."

The recorder noted at paragraph [12] of her judgment that

"it was common ground that the test for infringement under s.10(1) of the Act has six elements:
(i) there must be use of a sign by a third party;
(ii) the use must be in the course of trade;
(iii) it must be without the consent of the proprietor of the trade mark;
(iv) it must be of a sign which is identical to the trade mark;
(v) it must be in relation to goods or services which are identical to those for which the trade mark is registered; and
(vi) it must affect or be liable to affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services."

She also observed at paragraph [13] that the only issue in contention was the 5th of those elements, namely whether SU LETS was identical to SULETS.  

In Case C-291/00, LTJ Diffusion v Sadas Vertbaudet SA, ECLI:EU:C:2003:169, [2003] FSR 34, the European Court of Justice (as that court was then called) considered the proper test for identity of sign to mark between paragraphs [50] to [54] of its judgment:

"50. The criterion of identity of the sign and the trade mark must be interpreted strictly. The very definition of identity implies that the two elements compared should be the same in all respects. Indeed, the absolute protection in the case of a sign which is identical with the trade mark in relation to goods or services which are identical with those for which the trade mark is registered, which is guaranteed by art 5(1) (a) of the directive, cannot be extended beyond the situations for which it was envisaged, in particular to those situations which are more specifically protected by art 5 (1) (b) of the directive.
51. There is therefore identity between the sign and the trade mark where the former reproduces, without any modification or addition, all the elements constituting the latter.
52. However, the perception of identity between the sign and the trade mark must be assessed globally with respect to an average consumer who is deemed to be reasonably well informed, reasonably observant and circumspect. The sign produces an overall impression on such a consumer. That consumer only rarely has the chance to make a direct comparison between signs and trade marks and must place his trust in the imperfect picture of them that he has kept in his mind. Moreover, his level of attention is likely to vary according to the category of goods or services in question (see, to that effect, Lloyd Schuhfabrik Meyer v Klijsen Handel Case C-342/97 [1999] IP & T, [1999] ECR I-3819 (para 26)).
53. Since the perception of identity between the sign and the trade mark is not the result of a direct comparison of all the characteristics of the elements compared, insignificant differences between the sign and the trade mark may go unnoticed by an average consumer.
54. In those circumstances, the answer to the question referred must be that art 5 (1) (a) of the directive must be interpreted as meaning that a sign is identical with the trade mark where it reproduces, without any modification or addition, all the elements constituting the trade mark or where, viewed as a whole, it contains differences so insignificant that they may go unnoticed by an average consumer."

That decisions was followed by Mr Justice Lewison in  International Business Machines Corporation and another v Web-Sphere Ltd and others [2004] EWHC 529 (Ch) (17 March 2004). He held that "Web-Sphere" was identical to "WEBSPHERE" as the two were aurally identical and the addition of the hyphen would go unnoticed by an average consumer.

In Miss Recorder Michaels's view, the "average consumer" included not only university students but also the parents and guardians of such students  and landlords.  She concluded at paragraph [19] that those consumers would not notice the space between "SU" and "LETS" when used in plain word form. She also noticed that ESL's sign had been used occasionally as a single word as in "essex.su/sulets" on posters and marketing materials. She concluded that the mark and sign were both visually and conceptually identical. It followed that, subject to the s.11 (3) defence. ESL had infringed the mark pursuant to s.10 (1).

Did ESL infringe SUL's mark pursuant to s.10 (2) of the Act?

S.10 (2) of the 1994 Act 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."

In Specsavers International Healthcare Ltd v Asda Stores Ltd  [2012] FSR 19 Lord Justice Kitchin listed the factors to be taken into account when considering whether a mark had been infringed pursuant to s.10 (2):

"(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; and
(k) if the association between the marks creates a risk that the public might believe that the respective goods or services come from the same or economically-linked undertakings, there is a likelihood of confusion."

In this case, two points were disputed.  The first was whether ESL's sign was identical or similar to the registered mark.  The second was whether the similarities between sign and mark and between the specified services and those offered by ESL were likely to lead to confusion.

As to the first point, the recorder had already found the "SU LETS" sign to be identical to the registered mark.  If she was wrong in that conclusion, there was no doubt that the sign was similar to that mark.  The use of that word in combination with a stylized house device and a strap line made no difference:

"In my view, whilst the Defendant's logo must be considered as a whole, the words SU LETS are together the dominant element of the logo, partly because those words are so much larger than the other words in the logo, but also because the house device and the straplines have little distinctiveness, and would not be likely to be seen as an indication of origin. I also take into account the tendency of consumers to refer to a composite mark by reference to its verbal elements (see for instance Case T-223/16, Massive Bionics, SL v EUIPO, Apple Inc. EU:T:2017:500, [2017] E.T.M.R. 38 following Case T-363/06, Honda Motor Europe v OHIM-Seat (MAGIC SEAT) EU:T:2008:319). In my judgment consumers would typically refer to the logo only as SU LETS, and would not use the strapline phrases."

It did not avail ESL that SUL's mark was descriptive or that there were differences between the sign and mark.  The recorder noted at [26] that the test is whether there is similarity, not whether there are differences between the mark and sign. Despite those differences, her overall impression of ESL's logo was that it was dominated by the words SU LETS. She added that if she was wrong on that point, the words SU LETS retained an independently distinctive role in ESL's logo.

On the second point, SUL relied on misdirected correspondence and phone calls and a payment to the wrong party. ESL pointed to the paucity of evidence of confusion. The recorder took a different approach.  She noted  at [30] that 

"it is not necessary for the Claimant to prove any actual confusion in order to succeed in establishing a likelihood of confusion. What matters is whether the Court considers that there is a likelihood of confusion." 

She directed herself that 

"the likelihood of confusion must be appreciated globally and through the eyes of the average consumer of the goods and services in question." 

She concluded at [32] that 

"the use of this identical or highly similar sign upon identical services to those for which the Mark is registered (and on the specific sub-set of such services on which it has been used) does lead to a likelihood of confusion." 

Consequently, she found that the mark had been infringed pursuant to s.10 (2) subject to the s.11 (3) defence.

Could ESL rely on the s.11 (3) Defence?

S.11 (3) of the Trade Marks Act 1994 provides:

"A registered trade mark is not infringed by the use in the course of trade in a particular locality of an earlier right which applies only in that locality.

For this purpose an “earlier right” means an unregistered trade mark or other sign continuously used in relation to goods or services by a person or a predecessor in title of his from a date prior to whichever is the earlier of

(a) the use of the first-mentioned trade mark in relation to those goods or services by the proprietor or a predecessor in title of his, or 

(b) the registration of the first-mentioned trade mark in respect of those goods or services in the name of the proprietor or a predecessor in title of his; 

and an earlier right shall be regarded as applying in a locality if, or to the extent that, its use in that locality is protected by virtue of any rule of law (in particular, the law of passing off)."

After referring to Judge Hacon's judgment in Caspian Pizza Ltd and Others v Shah and Another  [2016] FSR 23, [2015] EWHC 3567 (IPEC) and the dicta of Lord Justice Patten on the appeal in that case in Caspian Pizza Ltd and Others v Shah and Another [2017] EWCA Civ 1874 between paragraphs [13] and [14] of his judgment, Miss Recorder Michaels directed herself at paragraph [37] of her judgment as follows:

"I consider that the reference in Patten LJ's judgment to the trade mark proprietor having used the mark 'in the same locality' as that in which the Defendant claims his earlier right means that the proprietor must be able to show either that he too had traded in that locality, or that he had goodwill which extended to that locality. Patten LJ plainly considered that goodwill local to an area other than the locality in which the Defendant enjoys his earlier right would not suffice to defeat the s 11(3) defence."

The recorder continued that the judgment and dicta gave rise to the following questions:

"a. Did the Defendant own goodwill in SU LETS in relation to student letting agency services in the locality of the University of Essex by the filing date of the Mark (27 March 2015) such that it benefits from an earlier right within the scope of s.11(3).
b. If so, did the Claimant, by the date at which the Defendant commenced using that sign, own goodwill in the Mark in relation to student letting agency services sufficient to restrain the Defendant's use of its sign so as to defeat the Defendant's defence under s.11(3)."

As to the question in paragraph a, the recorder held at paragraph [44] of her judgment that ESL not only had to show that it had an earlier right by the filing date of the mark but also that the right subsisted only in a particular locality in order to make good its s 11 (3) defence, There was no evidence before her specifically on that point, but it seemed to her highly improbable that all or most of ESL's customers were local students. She considered it possible that ESL's goodwill would not have been confined to the locality of the University of Essex, but could also have been national goodwill, albeit on a small scale. If so, then it seemed to her that ESL could not, in any event, succeed in its s. 11 (3) defence.

As I indicate below, there was also evidence before Miss Recorder Michaels that SUL had a sufficient national reputation and goodwill as a result of its marketing and business transactions to restrain the use of its SU LETS sign when it first started to use it.

For both of the above reasons, the recorder held at paragraph [54] that the s.11 (3) defence failed and the claims under s.10 (1) and (2) of the Trade Marks Act 1994 succeeded.

Did ESL pass off its business as and for SUL's?

At paragraph [55] he learned recorder summarized the issues as to passing off as follows:

"a. When did the Defendant commence trading under and by reference to the Defendant's signs?
b. By that date, did the Claimant own goodwill in the Mark in relation to student lettings agency services?
c. To what geographical area did such goodwill extend?
d. Does the Defendant's use of its signs amount to a misrepresentation?
e. Has the Claimant suffered or is it likely to suffer damage?"

She concluded in the next paragraph as follows:

"In brief, the Defendant commenced the acts complained of in about early October 2014, by which date the Claimant had in my view a national goodwill in the Mark. I have no doubt that use of the Defendant's name SU LETS whether as a name or in the form of the Defendant's logo would have amounted to a misrepresentation. There will not have been direct loss of sales caused by such misrepresentation, because of the different geographical areas in which the parties have, to date, provided their services. However, that is not to say that the misrepresentation would not cause damage or have the potential to cause damage to the Claimant, through the erosion of the distinctiveness of the SULETS name, potential harm caused by any inadequacies in the Defendant's services and in the potential restriction of the Claimant's intended expansion of its activities."

Accordingly the claim for passing off also succeeded.

Comment

The news that a students union letting service in one part of the country could restrain another students union in a different region from using an obvious and I think quite common abbreviation is startling at first blush even though the reasoning that led to that decision lacks neither clarity nor logic. 

As no attempt was made to challenge the registration of its mark it was inevitable that SUL would win on s.10 (1).  Trade marks are very powerful affording nationwide protection.  As that part of the case is unlikely to be appealed successfully, it will be a very useful authority on identity of marks and signs.    

I am less sure about the very broad definition of "average consumer" for the purposes of s.10 (2) and I find it hard to believe that students in Colchester would  confuse a service offered by their students union with one offered by students in Leicester.  For the same reason I was also surprised by the finding that ESL and SUL had more than local goodwill and the failure of the s.11 (3) defence and the success of the action for passing off.

Anyone wishing to discuss this post or trade marks and passing off in general should call me on 020 7404 5252 during office hours or send me a message through my contact form.