Honest Concurrent User as a Defence to Trade Mark Infringement and Passing off Claims - The Muzmatch Appeal

 Jane Lambert

Court of Appeal (The Lord Chief Justice of England and Wales and Lords Justices Arnold and Nugee) Match Group, LLC and others s v Muzmatch Ltd and another [2023] EWCA Civ 454 (27 April 2023)

This was an appeal against the decision of Mr Nicholas Caddick QC that the defendants had infringed the claimants' trade marks and were liable for passing off (see Match Group LLC  and others v Muzmatch Ltd and another  [2022] EWHC 941 (IPEC)).   The claimants were members of the Match Group which operates a worldwide online dating service. The first defendant ran an online dating service for Muslims that was formerly known as MUZMATCH but is now called MUZZ. The second defendant was the founder of the first defendant and its CEO.I discussed Mr Caddick's judgment in Trade Marks and Passing off: Match Group, LLC v Muzmatch Ltd on 1 Oct 2022.

The claimants' marks are set out in a table in my previous article. They objected to the defendants' use of the word “MATCH” as part of the first defendant's corporate name and also its use of the words “MATCH” and “TINDER” in a search engine optimization strategy that had been designed to increase the number of visitors the first defendant's website. The defendants admitted to infringing the TINDER marks but not those incorporating the word MATCH. They argued that MATCH used by itself was not distinctive and that the claimants were wrongly seeking to monopolize an ordinary descriptive word when used in relation to matchmaking and dating.  However, they did not challenge the validity of those marks.

Lord Justice Arnold gave the defendants permission to appeal against Mr Caddick's judgment on the following grounds:
  1. The deputy judge failed to take into account the characteristics of the average consumer when making his global assessment of a likelihood of confusion, and in particular, his earlier finding that the average consumer would pay a higher level of attention than for normal consumer items.
  2. The deputy judge failed to take into account the differences between the first defendant's services which were aimed specifically at the Muslim community with features designed to reflect Islamic values and the claimants' which were aimed at the general public, which differences were important when assessing the likelihood of confusion.
  3. The deputy judge erred in failing to take into account the absence of evidence of actual confusion despite the parties having traded side-by-side for over 10½ years by the time of the trial.
  4. The deputy judge erred in law in holding that the defence of honest concurrent use was not available to the defendants.  
To understand the last ground it is important to note that  Mr Caddick had said at para [138] of his judgment:

"it is not that honest concurrent user is a specific defence; rather, it is that where there has been honest concurrent use, the conditions for infringement are unlikely to be satisfied (see the suggestion made by Arnold J, in relation to s.10 (2), in W3 Ltd v Easygroup Ltd [2018] EWHC 7 at [287])."

The appeal came on before the Lord Chief Justice of England and Wales, Lord Justice Arnold and Lord Justice Nugee on 22 March 2023.  Their lordships handed down judgment on 27 April 2023.  The lead judgment was delivered by Lord Justice Arnold.  The Lord Chief Justice and Lord Justice Nugee gave short concurring judgments.

Before he considered the grounds of appeal, Lord Justice Arnold observed at para [42] of his judgment that Mr Caddick's conclusion that there was a likelihood of (indirect) confusion had involved a multi-factorial evaluation. The Court of Appeal could intervene only if the deputy judge had erred in law or principle.  In reaching that observation, Lord Justice Arnold relied on paras [78] to [81] of Lord Hodge's judgment in Actavis Group PTC EHF v ICOS Corp  [2019] RPC 9, [2019] UKSC 15, (2019) 167 BMLR 1, [2019] Bus LR 1318, [2020] 1 All ER 213 and paras [72] to [78] of the Court of Appeal's judgment in Re Sprintroom Ltd.  [2019] EWCA Civ 932, [2019] BCC 1031, [2019] 2 BCLC 617. 

He added that the defendants had permission to appeal against the finding of a likelihood of confusion in respect of the first three grounds.  As the reasons for the deputy judge's finding on passing off were exactly the same as for liability under s.10 (2) of the Trade Marks Act 1994, it was common ground that the two causes of action stood or fell together. The defendants also had permission to appeal against the deputy judge's finding that the use of the signs complained of would give rise to a link in the mind of the average consumer for the purposes of s.10 (3). The grounds of appeal against the finding of a link were the same as the grounds of appeal against a likelihood of confusion. 

As for the first ground of appeal, Lord Justice Arnold agreed that Mr Caddick had not explicitly stated that he was taking the average consumer's level of attention into account when considering the likelihood of confusion, but he did assess the matter from the perspective of the average consumer. There was no reason to think that he had not taken into account his own finding as to their level of attention less than 20 paragraphs previously.

Lord Justice Arnold did not accept the second ground of appeal for two reasons. The first was that the defendants had admitted that the first defendant's services were identical to those for which the trade marks had been registered. In the circumstances, there was no separate contextual factor that could be relied upon by the defendants for negativing a likelihood of confusion.  The second reason was that it was probable that a reasonable number of the claimants' users would have been Muslims. There was therefore an overlap between the consumers targeted by the claimants and those targeted by the defendants.

Regarding the third ground, the defendants had argued that Mr Caddick's judgment suffered from 6 identifiable flaws which Lord Justice Arnold catalogued between para [45] and para [52] of his judgment.  Except for the first alleged flaw which was that social media had not reported any confusion, Lord Justice Arnold disposed of each of the defendants' points shortly. 

The basis of the first contention was Lord Justice Arnold's observation in para [264] of his judgment in Glaxo Wellcome UK Ltd v Sandoz Ltd [2019] EWHC 2545 (Ch), [2019] RPC 27. He said that "the ubiquitous use of social media makes it much easier than it used to be for instances of confusion to be publicised and for well-resourced claimants to find them."   His lordship noted that Glaxo had not been cited to Mr Caddick before he considered whether either side had properly explored social media.   

His conclusion was that the deputy judge could not be criticised for not taking into account the possibility of instances of confusion being detected by means of searches of social media.   All the points that had been raised by the defendants were questions of assessment of the evidence which fell squarely within the remit of the deputy judge. Mr Caddick had been aware that there had been very little, if any, evidence of actual confusion despite over 10 years of parallel trade. The weight to be accorded to that factor was a matter for him. The Court of Appeal saw no error of principle in his decision to give that factor the weight that he had in the particular circumstances of this case.

Turning to the last ground, Lord Justice Arnold described the question of whether the defendants had a defence to trade mark infringement and passing off by virtue of "honest concurrent use" as the most important issue raised by the appeal.

The Defendants submitted that Mr Caddick had made two errors of law: first, in holding that the defence is only available where the use of the sign complained of was non-infringing use when it started; and secondly, in holding that the defence is only available if the use started before the trade mark was registered.  Lord Justice  Arnold added that there was an anterior question of law which was not directly addressed in the grounds of appeal, namely whether honest concurrent user was a separate defence or just a factor to be considered in the infringement analysis.

The claimants contended that honest concurrent use was not a free-standing defence, as opposed to a factor to be taken into account when assessing infringement. They argued that the deputy judge had taken the long concurrent use of MATCH and MUZMATCH into account when considering whether there was a likelihood of confusion and whether the defendants' use had taken unfair advantage of the reputation of their trade marks. In the alternative, the claimants contended that the defendants' use of the signs complained of had not been honest.

The key issue in dispute was therefore as follows:

"......... the judge held that honest concurrent use was not a separate defence, but rather a factor to be considered in the infringement analysis. Was he right about that?"

The lord justice's starting point was that honest concurrent user had its origin in English equitable doctrine before 1875.  He referred to Lord Diplock's speech in General Electric Co v General Electric Co Ltd [1972] 1 WLR 729 at 742-743:

"A right of property of this character [sc. the right of property in a trade mark] calls for an accommodation between the conflicting interests of the owner of the monopoly, of the general public as purchasers of goods to which the trade mark is affixed, and of other traders. This accommodation had been substantially worked out by the Court of Chancery by 1875.

The interest of the general public requires that they should not be deceived by the trade mark. It ought not to tell a lie about the goods. Two main kinds of deception had been the subject of consideration. These were misrepresentation (a) of the character of the goods to which the trade mark was attached, and (b) as to their origin, i.e. that they were the product of some other manufacturer.

But the interest of the public in not being deceived about the origin of goods had and has to be accommodated with the vested right of property of traders in trade marks which they have honestly adopted and which by public use have attracted a valuable goodwill. In the early 19th century trade was still largely local; marks which were identical or which closely resembled one another might have been innocently adopted by traders in different localities. In these their respective products were not sold in competition with one another and accordingly no question of deception of the public could then arise. With the rapid improvement in communications, however, in the first half of the 19th century markets expanded; products of two traders who used similar marks upon their goods could thus come to be on sale to the same potential purchasers with the consequent risk of their being misled as to the origin of the goods. Furthermore, it was accepted that as an adjunct of the goodwill of the business the right to use a trade mark might be acquired by more than one successor if the goodwill of the business were divided, as it might be, for instance, where the business had formerly been carried on in partnership or from more than one manufactory or shop. To meet this kind of situation the doctrine of honest concurrent user was evolved. Under this doctrine a trade mark remained entitled to protection in cases where the use of it had not originally been deceptive but a risk of deception had subsequently arisen as a result of events which did not involve any dishonesty or other wrongful conduct upon the part of the proprietor of the mark. If, however, his own wrongful conduct had played a part in making the use of the mark deceptive, the Court of Chancery would not grant him an injunction against infringement. This was but a particular application of the general equitable doctrine that he who seeks equity must come with clean hands.

In cases of honest concurrent user, neither of the owners of the mark could restrict the other from using it, but as against a usurper who infringed it either owner of the mark could obtain an injunction: Dent v. Turpin( 1861) 2 J. & H. 139 and Southorn v. Reynolds (1865) 12 L.T. 75"

Lord Justice Arnold said that the doctrine of honest concurrent use was relied upon to permit the registration of identical or similar trade marks in respect of the same classes of goods pursuant to the general discretion conferred by s.6 of the Trade Marks Act 1875.  The doctrine was incorporated into The Trade Marks Act 1905 and subsequently s.12 (2) of the Trade Marks Act 1938:

"In case of honest concurrent use, or of other special circumstances which in the opinion of the Court or the Registrar make it proper so to do, the Court or the Registrar may permit the registration of trade marks that are identical or nearly resemble each other in respect of the same goods or description of goods by more than one proprietor subject to such conditions and limitations, if any, as the Court or the Registrar, as the case may be, may think it right to impose."

Lord Justice Arnold observed that Lord Diplock had summarized the legal effect of that subsection as follows:

"(1) The fact that the mark is entered upon the register is prima facie evidence of the validity of the original registration and of the right of the registered proprietor to the exclusive use of the mark, subject however to the rights of concurrent user by any registered proprietor of an identical mark or one nearly resembling it.
(2) If the mark was likely to cause confusion at the time when it was first registered it may be expunged from the register as 'entry made in the register without sufficient cause' unless the proprietor of the mark at that time would have been entitled to have it entered on the register by reason of his honest concurrent use of the mark as a trade mark before the original registration of the mark.
(3) If the likelihood of causing confusion did not exist at the time when the mark was first registered, but was the result of events occurring between that date and the date of application to expunge it, the mark may not be expunged from the register as an entry wrongly remaining on the register, unless the likelihood of causing deception resulted from some blameworthy act of the registered proprietor of the mark or of a predecessor in title of his as registered proprietor.
(4) Where a mark is liable to be expunged under (2) or (3) the court has a discretion whether or not to expunge it and as to any conditions or limitations to be imposed in the event of its being permitted to remain on the register."

Lord Justice Arnold added that concurrent registration also  provided a defence to infringement under s.4 (4) of the Trade Marks Act 1938:

"The use of a registered trade mark, being one of two or more registered trade marks that are identical or nearly resemble each other, in exercise of the right to the use of that trade mark given by registration as aforesaid, shall not be deemed to be an infringement of the right so given to the use of any other of those trade marks."

He also mentioned that s,.7 of the Act also saved vested rights:

"Nothing in this Act shall entitle the proprietor or a registered user of a registered trade mark to interfere with or restrain the use by any person of a trade mark identical with or nearly resembling it in relation to goods in relation to which that person or a predecessor in title of his has continuously used that trade mark from a date anterior—

(a) to the use of the first-mentioned trade mark in relation to those goods by the proprietor or a predecessor in title of his; or
(b) to the registration of the first-mentioned trademark in respect of those goods in the name of the proprietor or a predecessor in title of his;

whichever is the earlier, or to object (on such use being proved) to that person being put on the register for that identical or nearly resembling trade mark in respect of those goods under subsection (2) of section twelve of this Act."

At para [68] of his judgment, Lord Justice Arnold stated that a similar doctrine known as "concurrent goodwill" or "honest concurrent use" had developed in the law of passing off. He quoted the following passage from Lord Justice Oliver's judgment in Habib Bank Ltd v Habib Bank AG [1981] 1 WLR 1265 at 127:

"I think, if I may say so, that Mr. Jeffs's submissions are too ambitious in this sense, that they seek to elevate into a doctrine dignified by a term of art — 'the doctrine of honest concurrent user' — what is, in the sphere of passing off, merely a facet of Lord Diplock's first essential ingredient of misrepresentation in Erven Warnink Besloten Vennootschap v. J. Townend & Sons (Hull) Ltd. [1979] A.C. 731, 742. As Mr. Aldous has pointed out, section 2 of the Trade Marks Act 1938 expressly provides that nothing in the Act is deemed to affect any rights of action for passing off. The fact therefore that two or more people may be entitled to rely upon honest concurrent user of a mark to achieve registration leaves quite unaffected the question of whether they may be entitled to sue one another in a passing off action. What I think Mr. Jeffs is really saying in propounding his doctrine is really this, that where you find that two traders have been concurrently using in the United Kingdom the same or similar names for their goods or businesses, you may well find a factual situation in which neither of them can be said to be guilty of any misrepresentation. Each represents nothing but the truth, that a particular name or mark is associated with his goods or business."

Lord Justice Arnold added that Mr Recorder Purvis QC had reviewed the authorities on honest concurrent user in relation to passing off in W.S. Foster & Son Ltd v Brooks Brothers UK Ltd [2013] EWPCC 18 at [61] and stated as follows:

"The authorities therefore seem to me to establish that a defence of honest concurrent use in a passing off action requires at least the following conditions to be satisfied:
(i) the first use of the sign complained of in the United Kingdom by the Defendant or his predecessor in title must have been entirely legitimate (not itself an act of passing off);
(ii) by the time of the acts alleged to amount to passing off, the Defendant or his predecessor in title must have made sufficient use of the sign complained of to establish a protectable goodwill of his own;
(iii) the acts alleged to amount to passing off must not be materially different from the way in which the Defendant had previously carried on business when the sign was originally and legitimately used, the test for materiality being that the difference will significantly increase the likelihood of deception."

Lord Justice Arnold turned his attention to The Trade Marks Act 1994.  He noted that it was enacted to implement the First Trade Mark Directive and provide for the Community Trade Mark Regulation, the Madrid Protocol and the Paris Convention.   However, s7 (2) of that Act provided that 

"where on an application for the registration of a trade mark it appears to the registrar—
(a) that there is an earlier trade mark in relation to which the conditions set out in section 5 (1), (2) or (3) obtain, or
(b) that there is an earlier right in relation to which the condition set out in section 5(4) is satisfied,
but the applicant shows to the satisfaction of the registrar that there has been honest concurrent use of the trade mark for which registration is sought"

the registrar should not refuse the application by reason of the earlier trade mark or other earlier right unless objection on that ground is raised in opposition proceedings by the proprietor of that earlier trade mark or other earlier right.

Nevertheless, Lord Justice Arnold also noted that neither the Directive nor the Regulation provided any defence to trade mark infringement on the ground of honest concurrent use.

Nevertheless, the lord justice detected the evolution of something close to the doctrine from the requirement that the use of an accused sign must affect, or be liable to affect, one of the functions of the registered trade mark if a claim for infringement under s.10 (2) of the Act is to be made out. The question of whether honest concurrent use fitted into that condition was considered by the Court of Justice of the European Union in Case C-482/09 Budejovický Budvar np v Anheuser-Busch Inc [2011] ECR I-870. Both parties had sold beer and had acquired goodwill in the UK by reference to the "Budweiser" sign.  The Court ruled that:

"Article 4(1)(a) of Directive 89/104 must be interpreted as meaning that the proprietor of an earlier trade mark cannot obtain the cancellation of an identical later trade mark designating identical goods where there has been a long period of honest concurrent use of those two trade marks where, in circumstances such as those in the main proceedings, that use neither has nor is liable to have an adverse effect on the essential function of the trade mark which is to guarantee to consumers the origin of the goods or services."

Lord Justice Arnold noted that there had been a number of cases in which honest concurrent use has been invoked as a defence to infringement since Budweiser of which IPC Media Ltd v Media 10 Ltd [2014] EWCA Civ 1439, [2015] FSR 12 was particularly relevant because it established the following propositions:

"First, honest concurrent use may defeat an allegation of infringement under section 10 (2) of the 1994 Act, as well under section 10 (1). Secondly, this is not because honest concurrent use provides a free-standing defence, but because it shows that the conditions for infringement are not satisfied. Thirdly, it may do so even if there is some actual confusion on the part of consumers. Fourthly, it may do so even if the trade mark proprietor is the senior user in relation to the relevant services (or goods)."

The learned lord justice also analysed Victoria Plum Ltd v Victorian Plumbing Ltd [2016] EWHC 2911 (Ch), [2017] Bus LR 363, Walton International Ltd v Verweij Fashion BV [2018] EWHC 1608 (Ch) [2018] RPC 19 and  Bentley 1962 Ltd v Bentley Motors Ltd [2019] EWHC 2925 (Ch), [2020] FSR 15.

In Lord Justice Arnold's judgment, Mr Caddick was correct that honest concurrent use is not a separate defence, but a factor in the infringement analysis. Neither the EU Trade Mark Regulation nor Directive 2015/2436 nor even the 1994 Act provided a defence to infringement on the ground of honest concurrent use.  In the case of claims for infringement under s.10 (1) honest concurrent use may be relied upon by a defendant as sufficiently rebutting the presumption that there is a likelihood of confusion. In the case of claims for infringement under s 10 (2), the relevance of honest concurrent use lies in assessing whether there is a sufficient likelihood of confusion in the first place having regard to the difference in the guarantee of origin provided by the trade mark and the sign.  Similarly, in the case of claims for infringement under s.10 (3) the relevance of honest concurrent use lies in assessing the existence of one of the specified kinds of injury having regard to that difference.

In argument, the defendants had argued that it did not matter whether honest concurrent user was a separate defence or a factor in an infringement analysis.  What mattered was the incidence of the burden of proof and the relevant date.   Lord Justice Arnold agreed that once the claimant has established a prima facie case of infringement, the burden shifts to the defendant to establish that, by virtue of its honest concurrent use, there is no adverse effect on any of the functions of the trade mark.

Although Mr Caddick did not ask himself whether most of the relevant class of consumers had been educated to understand that MUZMATCH was unrelated to MATCH, Lord Justice Arnold considered that it was clear from the deputy judge's analysis of the likelihood of confusion that, had he posed himself that question, his answer would have been in the negative. 

The essence of his analysis was that it was likely that a substantial proportion of the relevant class of consumers encountering MUZMATCH would have assumed that it was related to MATCH even though almost no such confusion had been detected. Given that he was entitled to reach that conclusion, it follows that he was also entitled to conclude that the defendants' concurrent use did not demonstrate otherwise. Unlike cases such as Budweiser and IPC v Media, this is not a case where the length and scale of the concurrent use compel the court to infer that most consumers have learnt the difference between the two marks. 

That conclusion was equally applicable to the claim for passing off.

Finally,  as the Court had found that there was a likelihood of confusion the defendants' concurrent use of the MUZMATCH sign did not show that they had not taken unfair advantage of the reputation of the MATCH trade marks.

As that was enough to dispose of the appeal Lord Justice Arnold did not consider whether the first defendant's use of the MUZMATCH sign had not been honest.   Part of the claimant's case depended on the defendants' admission that they had infringed the TINDER mark.   His lordship considered that that matter would have been irrelevant.

For the reasons set out above the appeal was dismissed.

This case appears to settle beyond doubt the question of whether honest concurrent use is a separate defence to a trade mark action.   It is at best a factor to be taken into account when considering whether there is a likelihood of confusion or unfair advantage.

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