Trade Marks and Passing off - Fit Kitchen Ltd v Scratch Meals Ltd

By Scott Bauer - This image was released by the Agricultural Research
 Service, the research agency of the United States Department of Agriculture,
with the ID k7245-1 (next)., Public Domain,
https://commons.wikimedia.org/w/index.php?curid=1636079

Jane Lambert

Intellectual Property Enterprise Court (HH Judge Hacon) Fit Kitchen Ltd and another v Scratch Meals Ltd [2020] EWHC 2069 (IPEC) (29 July 2020)

This was an action for trade mark infringement and passing off. There was also a counterclaim for the invalidation of the claimant's mark under s.47 (1) of the Trade Marks Act 1994,   The action and counterclaim were tried by His Honour Judge Hacon on 17 June 2020.  His judgment in  Fit Kitchen Ltd and another v Scratch Meals Ltd [2020] EWHC 2069 was handed down on 29 July 2020.

The first claimant is a private company incorporated with limited liability in England and Wales in the name of Fit Kitchen Limited ("Fit Kitchen") under company number 09446763. Fit Kitchen is the proprietor of UK trade mark number 3179170 which is registered for "catering (food and drink -); food preparation services" in class 43.  The company prepares and delivers meals in accordance with its customers' requirements that the customers enter through the company's website.  More details of the service are available on the "How it works" page of that site.  The defendant also prepares and delivers ready meals. Although its corporate name is "Scratch Meals Limited" ("Scratch") it supplied meals under the sign "Fit Kitchen" between 2016 and 2019.  A photograph of one of those meals with the "Fit Kitchen" signage appears at paragraph [4] of Judge Hacon's judgment.

Fit Kitchen and its founder, Amar Lodhia ("Mr Lodhia"), the second claimant, sued Scratch under s.10 (2) and (3) of the Trade Marks Act 1994.   Scratch's main defence to the trade mark infringement claim was that the registration was invalid as it had been sought in the name of Fit Kitchen at a time when Fit Kitchen was dissolved and had been removed from the company register.  It also denied that Fit Kitchen's trade mark had a reputation in the UK.  The judgment does not discuss Scratch's defence to passing off but, as it had denied reputation in relation to s.10 (3), it may be surmised that Scratch will have challenged Fit Kitchen's claim to goodwill.  The judge considered the counterclaim first and then turned to the claims for trade mark infringement and passing off.

On 2 Aug 2016, Fit Kitchen was dissolved by the Registrar of Companies under s.1000 (3) of the Companies Act 2006 for failure to file accounts.  The Registrar gave Fit Kitchen notice of intention to dissolve the company on 17 May 2016 and issued the dissolution on 2 Aug 2016.   On 8 Aug 2016 Mr Lodhia, applied for the trade mark.  The application was advertised in the usual way.  Nobody objected to the application and the mark was registered on 4 Nov 2016.   Mr Lodhia did not become aware of the dissolution until the following May when he found that the company's bank account had been frozen.  He applied for the restoration of the company on 30 May 2017 and the application was granted on 11 Dec 2017.  A copy of the application for administrative restoration to the register in Form RT01 appears on the Companies House website.

Scratch had pleaded that Mr Lodhia had filed or alternatively procured the filing of, the application for Fit Kitchen's mark in the express knowledge that Fit Kitchen was not at that time in fact conducting, or capable of conducting, any or any material trade under the mark and Fit Kitchen had already been dissolved and struck off the register of companies.  Consequently, the trade mark application was an act which fell short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in this area.

Judge Hacon rejected that contention.   Mr Lodhia had explained that some of his company's mail went astray because its address and postcode were very similar to that of the East London Arts and Music School which was preparing to open.  That is what is likely to have happened to the Registrar's warnings because he had no recollection of receiving them.   The judge accepted that explanation and so did Scratch's counsel.   The concession meant that there was no bad faith as pleaded and that the counterclaim failed.

Scratch advanced an alternative argument that did not depend on the state of Mr Lodhia's knowledge.  On the date of application for the trade mark Fit Kitchen had been dissolved. A dissolved company cannot apply for a trade mark. The validity of the mark must be assessed as of the application date. Therefore the trade mark is invalid.   Fit Kitchen replied that s.1028 (1) of the Companies Act 2006 provides that the general effect of administrative restoration to the register is that the company is deemed to have continued in existence as if it had not been dissolved or struck off.   Scratch's response was that the trade mark belonged to the Crown as bona vacantia.  Fit Kitchen contended that might have been the case had the Crown assigned the trade mark or exercised some other right of ownership but that had not happened.  The judge described those arguments as "interesting" but declined to consider them as they had not been pleaded.

Scratch conceded similarity of marks and services at trial but not that such similarity gave rise to the likelihood of confusion.  There was however evidence of actual confusion and that was enough for the judge to find that there had been infringement under s.10 (2) of the Act.   Scratch contended that the registered mark could not guarantee the origin of Fit Kitchen's food while that company was dissolved because it did not exist.   Judge Hacon replied that that was to misunderstand the origin function of a trade mark.  Trade marks do not guarantee that goods or services come from a particular entity.  Only that they are from a source that will guarantee their quality.

As to whether Fit Kitchen had a reputation in the UK, His Honour referred to paragraph [69] of his judgment in Burgerista Operations GmbH v Burgista Bros Ltd and others [2018] EWHC 35 (IPEC) (12 Jan 2018):

"I draw the following from the judgments of the Court in PAGO and Iron & Smith and from the opinion of Advocate General Wahl in Iron & Smith:
(1) An EU trade mark has a reputation within the meaning of art.9 (2) (c) if it was known to a significant part of the relevant public at the relevant date.
(2) The relevant public is those concerned by the products or services covered by the trade mark.
(3) The relevant date is the date on which the defendant first started to use the accused sign.
(4) From a geographical perspective, the trade mark must have been known in a substantial part of the EU at the relevant date.
(5) There is no fixed percentage threshold which can be used to assess what constitutes a significant part of the public; [but] it is proportion rather than absolute numbers that matters.
(6) Reputation constitutes a knowledge threshold, to be assessed according to a combination of geographical and economic criteria
(7) All relevant facts are to be taken into consideration when making the assessment, in particular the market share held by the trade mark, the intensity, geographical extent and duration of its use, and the size of the investment made by undertaking in promoting it."

(8) The market for the goods or services in question, and from this the identity of the relevant public, ought to assume a paramount role in the assessment.
(9) The territory of a single Member State (large or small) may constitute a substantial part of the EU, but the assessment must be conducted without consideration of geographical borders."

At paragraph [42] of his judgment in Fit Kitchen the learned judge said that the same principles could be applied to the UK for the purpose of s.10 (3).   In Iron & Smith, the Advocate-General had said at paragraph [17] of his opinion that the paramount role in the assessment is the identification of the relevant public - that is to say, those concerned with the services covered by the trade mark. This is derived from the market for the goods or services in question.   In this case, the specified goods were "catering (food and drink); food preparation and services".  It followed that every person in the UK was a potential customer. 

The judge considered the evidence at paragraph [46]:

"The initial conduct of [Fit Kitchen]'s business under the Trade Mark was from Mr Lodhia's home, beginning in March 2015. The move to conducting the business from the website came in June 2016. The evidence of [Fit Kitchen]'s use of its Trade Mark up to December 2016 included figures for turnover: £22,689 up to 29 February 2016 and a small amount more between then and December, to be inferred from the turnover figure for 1 March 2016 to 28 February 2017 which was £528. The website was of course accessible to everyone in the UK by December 2016 but there were no figures for website hits or the numbers of people who had registered on the website up to December 2016. There were six Instagram posts by Mr Lodhia in June 2015 and one in September 2015. Only one instance of press coverage happened before December 2016, namely an article in Square Mile magazine dated 19 October 2016."

In the learned  judge's view, that did not constitute evidence of a reputation in the UK catering services market within the meaning of s.10 (3) as that term has been explained by the Court of Justice of the European Union.   It followed that the claim under s.10 (3) must fail.

However, the above evidence was more than enough to establish goodwill and the evidence of confusion relating to s.10 (2) indicated misrepresentation,   As damage could be inferred, the claimants succeeded on passing off as well as trade mark infringement under s.10 (2).

Anyone wishing to discuss this case or trade marks and passing off generally is welcome to call me on 020 7404 5252 during office hours or send me a message through my contact form.