Trade Marks and Passing off - Nomination Di Antonio E Paolo Gensini SNC v Brealey and Another

Jane Lambert

Intellectual Property Enterprise Court (Judge Hacon) Nomination Di Antonio E Paolo Gensini SNC and another v Brealey and another (t/a JSC Jewellery) [2019] EWHC 599 (13 March 2019)

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

The Claimants

The first claimants are an Italian partnership dealing in charm bracelets.   The second is an Italian company that markets those bracelets.  The judge referred to the claimants collectively as "Nomination."   The second claimant advertises the bracelets in the UK on its website at www.nomination.com. Judge Hacon, who tried the action, called one of those products as a "composable bracelet" at paragraph [7] of his judgment. and described it as follows:

"It consists of individual links, measuring about 10 x 9mm, which may be detached from each other and relinked in any order to the taste of the wearer. These include what were called 'base links', which are made of stainless steel and bear the NOMINATION device mark. Nomination also sell a wide variety of decorated links and links with charms attached, all of which may be added to the bracelet. Some of the decorated and charm links are made of precious stones, set in 18k or 9k gold or silver, and are priced accordingly. Others are less expensive."

There was evidence before the judge that the claimants' links can cost as little as £10.

The Trade Marks

The first claimants registered the word NOMINATION as an EU trade mark for a range of goods in class 14 including "precious metals and their alloys and goods in precious metals or coated therewith, not included in other classes; jewellery, precious stones; horological and chronometric instruments" under trade mark number EU000456822. They also registered that same word for those same and other goods as an international mark designating the European Union under trade mark number WE00000769289.  Finally, they registered the word NOMINATION "written in small capital letters and the initial and final N in capital letters; the final letter N ends further down with respect to the word" for the same and other goods as an international trade mark designating the EU under trade mark number WE00001069273.  The second claimant is the first claimants' exclusive licensee.

The Defendants

The Defendants, Ebastian and Victoria Brealey, are a husband and wife team who sell body and costume jewellery online in partnership online in the name or style of JSC Jewellery from premises in Caerphilly.  The judge referred to them as "JSC",

The Dispute

According to the trial judge:

"[9] ........ From 2004 JSC began to sell composable charm bracelets (not made by Nomination) under their trading name 'Daisy Charm' and under a logo. The logo was registered as a UK trade mark as of 8 October 2010 for all goods in class 14.
[10] In January 2011 JSC's listing on eBay was amended to state that JSC's product 'fits Nomination'. This reflected the fact that the links of JSC's bracelets were interchangeable with those of Nomination's bracelets; a JSC link can be fitted to a Nomination link using a similar click mechanism – or vice versa – to create a mixed bracelet. JSC sold its products as 'Italian charms' promoting them by reference to the Daisy Charm logo. In February 2013, due to a change of policy at eBay, JSC stopped stating 'fits Nomination' on its site and did not otherwise indicate compatibility with Nomination bracelets.
[11]  Shortly afterwards JSC started to buy Nomination 'base bracelets' from retailers of Nomination's products in Germany and Italy. Base bracelets are composed of 13 or 18 base links (no decorated or charm links). The bracelets were disassembled by JSC into individual links. Between April 2013 and July 2018 JSC sold single Nomination base links bundled together with a single JSC link. The bundles either consisted of two blister packs, one for each of the Nomination and JSC links, or alternatively the JSC link was supplied in a blister pack and the Nomination base link was in a small plastic bag bearing a label 'Manufactured by Nomination Italy Repackaged by JSC Jewellery UK'.
[12] From 2015 some of the Nomination base links supplied by JSC were sourced from a UK retailer and others from an Italian retailer, in each case purchased as single links from disassembled Nomination bracelets.
[13] The bundles of two links were advertised and sold by JSC on eBay.
[14]  JSC stopped selling these bundled links in July 2018. However, in response to the allegation in the Particulars of Claim that JSC threatens and intends to continue such sales, JSC's Defence goes no further than a non-admission. I infer that JSC has taken the reasonable view that if their sales of bundled links are found to be lawful they will be recommenced.
[15]   Nomination alleges that JSC's advertising and sales of the bundled base links infringed the Trade Marks. Nomination also alleges that such sales passed the bundles off as being goods made by, or authorised by, or otherwise associated with Nomination."

Trade Mark Infringement

The claimants complained that the defendants had infringed the trade marks by using the Nomination sign in relation to genuine, individual Nomination base links and by using that sign in relation to their own links.  The defendants relied on s.12 (1) of the Trade Marks Act 1994 which provides:

"A registered trade mark is not infringed by the use of the trade mark in relation to goods which have been put on the market in the European Economic Area under that trade mark by the proprietor or with his consent."

The claimants replied that they had "legitimate reasons" to oppose further dealings with the goods in accordance with s.12 (2).

Reference to the UK Statute rather than the Community or EU Trade Mark Regulationa

Although the claim was for the infringement of an EU and not a national trade mark, the learned judge curiously referred to the Trade Marks Act 1994 and the directives that the statute implemented rather than the Community Trade Mark Regulation which would have applied until 30 Sept 2017 or the EU Trade Mark Regulation which applies now.

Probably nothing hangs on that in practice because every section of the Trade Marks Act 1994 relied upon by either side has a counterpart of in the Community and EU Trade Mark Regulations.   For instance, the counterpart of s.12  of the Act is art 15 of the EU Trade Mark Regulation:

"1. An EU trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the European Economic Area under that trade mark by the proprietor or with his consent.

2. Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market."

One explanation may be that the particulars of claim referred to s.10 of the Trade Marks Act 1994 rather than art 9 of either Regulation.   Another explanation may be that EU trade marks and international trade marks designating the EU will become national marks under proposed The Trade Marks (Amendment etc.) (EU Exit) Regulations 2018 and the judge may have anticipated that the UK would have left the EU by the time he had delivered judgment.

The Issues

In the first paragraph of his judgment, Judge Hacon summarized the main issue in the following question:

"Is the purchaser of a product sold under a trade mark entitled to disassemble the product and sell component parts under the trade mark?"

He broke that question down as follows at paragraph [26]:

"(1) Whether Nomination's consent to the marketing of its base bracelets constituted consent to the marketing of the base links individually, such that s.12 (1) of the 1994 Act/art.7 (1) of the Trade Mark Directive was engaged.
(2) If so, whether there existed legitimate reasons for Nomination to oppose further commercialisation of individual base links by JSC, pursuant to s.12 (2)/art. 7 (2). The reasons advanced were:
(a) Nomination's retailers were not entitled to sell base links either singly or as a base bracelet without a Nomination decorated or charm link.
(b) Nomination sold its products in high quality packaging, whereas JSC marketed the Nomination base links in low quality blister packs or plastic bags.
(c) The packaging in which Nomination sold its products was accompanied by a written guarantee stamped at the point of sale. Purchasers of Nomination base links from JSC did not benefit from the guarantee.
(d) JSC had repackaged some of the base links without identifying who had done the repackaging.
(e) The repackaging used by JSC placed the condition of the Nomination links at risk.
(3) Whether JSC had used the Nomination sign in relation to its own links.
(4) Whether JSC had represented to the public that its own links had been made by Nomination or were authorised by, or otherwise connected in the course of trade with Nomination.
(5) Whether Nomination had suffered damage as a consequence of JSC's misrepresentation."

Whether Nomination's consent to the marketing of its base bracelets constituted consent to the marketing of the base links individually

After considering evidence from the parties and a retailer, the judge found at [35]  that the claimants' retail customers, including those that supplied the defendants with the entire bracelets which they later disassembled by and those that supplied single base links to JSC, reasonably assumed that they could sell single base links if asked to do so. He added that Nomination did not express any restriction on sales of individual links at the relevant time and probably did not consider that there was a need for such a restriction. That was not the end of the story because consent cannot always be implied from the absence of a prohibition.

As to whether consent could be inferred, the learned judge considered the decisions of the Court of Justice of the European Union in Joined Cases C-414/99 to C-416/99 Zino Davidoff SA v A & G Imports Ltd, EU:C:2001:617, ECLI:EU:C:2001:617, [2001] EUECJ C-414/99, Case C-414/99 and Case C-173/98 Sebago and Ancienne Maison Dubois et Fils v GB-Unic SA  [2000] RPC 63, [2000] Ch 558, [1999] CEC 273, [1999] ETMR 681, [1999] ECR I-4103, [1999] 2 CMLR 1317, [1999] All ER (EC) 575, [2000] 2 WLR 1341, [1999] EUECJ C-173/98. Those authorities were not entirely on point as they were concerned with the importation of goods from outside the EEA and the proprietor's objection to their marketing in the EEA had been assumed.  The claimants could not object to disassembly per se since the whole point of the bracelets was that they could be disassembled and reassembled in different combination.  If they had an objection it must lie in the manner in which the goods were marketed or distributed in which case art 7 (2) of the Directive (or art 15 (2) of the Regulation) would apply,.

Whether there were legitimate reasons for the claimants to oppose further commercialisation of individual base links by the defendants 

The claimants' objections are listed in sub-paragraphs (a) to (e) above.  The judge had already dealt with the objection in paragraph (a) earlier in his judgment.  As for (c), it was not clear that end users relied on the claimants' guarantee since they added nothing to the implied terms of quality and fitness under the Sales of Goods Act 1979.  He held that objections (d) and (e) might have relevance to pharmaceuticals but not to jewellery. 

After considering Joined Cases C-457, 429 and 436/93 Bristol-Myers Squibb v Paranova A/S, [1997] 1 CMLR 1151, [2002] 3 WLR 1746, (1997) 34 BMLR 59, [1996] ECR I-3457, [1997] FSR 102, [1996] CEC 716, [2003] Ch 75, [1996] ETMR 1, [1996] EUECJ C-427/93, Case C-348/04, Boehringer Ingelheim KG v Swingward Ltd, [2007] ETMR 71, Case C-337/95 Parfums Christian Dior SA v Evora BV [1997] ECR I-6013, [1997] EUECJ C-337/95 and  Case C-59/08 Copad SA v Christian Dior Couture SA, Case [2009] ETMR 40, [2009] EUECJ C-59/08, [2009] Bus LR 1571, [2009] FSR 22, Judge Hacon directed himself to reach a view as to whether it was likely that JSC's packaging would damage the reputation of the trade marks and thereby the claimants. The judge thought that that was likely. He was satisfied that the elegant packaging of Nomination's bracelets would convey an image of luxury to purchasers and that that increased the reputation of the trademarks. The receipt of Nomination's products in a small blister pack or polythene bag was likely to damage that reputation.

He concluded at [64] that the claimants had legitimate reasons to oppose sales of Nomination base links. The packaging used by JSC to supply its customers, blister packs or polythene bags, was liable to damage the reputation of the trade marks. Consequently, such sales infringed the trade marks.

Whether the defendants used the Nomination sign in relation to their own links

The judge was shown a posting on eBay dated 17 March 2015 which advertised bundles of one JSC link plus one Nomination link: "1 x Family Superlink Daisy Charm 1 x Genuine Nomination Italian Charms"

The advertisement continued:

"JSC Italian Charm – DAISY CHARM Plus Nomination Charm
Item description
18mm (superlink) Family charm of your choice by Daisy Charm®, plus you also get a single branded Nomination link for your bracelet. So you will receive one branded Daisy Charm and one plain Nomination link, both compatible and for the classic size bracelet.
…
Mix and match with the thousands of Daisy Charm UK branded Italian charms for your classic Italian charm bracelet that can be found on our eBay store, just click on the door symbol near the top of the page.
The Daisy charm is 9mm x 18mm in size, has a matt finish, and the Nomination charm is 9mm in size and has a shiny finish. All our 9mm charms come individually packaged in a small blister packet and have our brand name – Daisy Charm – stamped on the back."

In His Honour's view, a reasonable reader would have received a blurred message about the manufacturing source of the two bundled links and might have formed the impression that both are made for JSC, one of them being styled 'Nomination'.  There was evidence of customer confusion from retailers which took the form of complaints that the links that had been supplied by the defendants were incompatible with Nomination's frames. The learned judge concluded that JSC's advertising and supply of bundled Nomination base links with its own Daisy Charm links had led to confusion in the mind of some of the relevant public. He guessed that it took different forms, but found that among a significant proportion the confusion took the form of a belief that charms not made by Nomination were genuine Nomination charms.  As the Nomination sign had been used in relation to JSC goods it followed that the defendants had infringed the trade mark under s.10 (1) of the Trade Marks Act 1994.

Misrepresentation

Judge Hacon found that the above advertisements amounted to a misrepresentation.

Damage

The judge held that the evidence of confusion from the retailers constituted proof of damage to the claimants,

Conclusion

His Honour concluded at [82] that the defendants had infringed the claimants' trade marks and passed off their goods as and for the claimants'.   

Comment

The key to this case is Judge Hacon's direction to himself to "reach a view as to whether it was likely that JSC's packaging would damage the reputation of the trade marks and thereby the claimants".  That is certainly common sense but may not be right. The law on parallel imports and exhaustion of rights in relation to non-pharmaceutical goods is far from settled.  It is regrettable that it is likely soon to be impossible to make references under art 267 of the Treaty on the Functioning of the European Union. If ever there was a case that should have been referred to Luxembourg it is this one. 

Contact

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