Trade Marks - Lidl v Tesco
Business and Property Courts of England and Wales, Intellectual Property List (Mrs Justice Joanna Smith) Lidl Great Britain Limited and another v Tesco Stores Ltd and another [2023] EWHC 873 (Ch) (19 April 2023)
This was an action for trade mark and copyright infringement and passing off brought by Lidl Great Britain Ltd and Lidl Stiftung & Co KG ("Lidl") against Tesco Stores Ltd and Tesco Plc ("Tesco"). There was also a counterclaim by Tesco for the invalidation and revocation of certain Lidl marks. The action and counterclaim came on for trial before Mrs Justice Joanna Smith on 7, 8, 9 and 14 Feb 2023. By para [316] of her judgment, which she handed down on 19 April 2023, her ladyship found for Lidl on its claim and for Tesco on part of its counterclaim (Lidl Great Britain Ltd and another v Tesco Stores Ltd and another [2023] EWHC 873 (Ch) (19 April 2023).
The Registrations
Lidl is the registered proprietor of the following marks:
Examples of the marks that the judge called "the wordless mark" and "the mark with text" and the use of the mark with text appear below.
The Complaint
Lidl alleged that Tesco's use of the following sign infringed its trade marks and copyrights and amounted to passing off.
Trade Mark Infringement
This action was unusual in that the claimant relied entirely on s.10 (3) of the Trade Marks Act 1994::
"A person infringes a registered trade mark if he uses in the course of trade, in relation to goods and services, a sign which(a) is identical with or similar to the trade mark,
..........................
where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark".
The judge explained at para [69] that "the aim of s. 10 (3) is to protect the reputation of a registered trade mark from damage in the form of unfair advantage or detriment to the distinctive character or repute of the mark."
It was common ground that, in general, the question of whether the use of a sign infringes a trade mark falls to be assessed as at the date that the use of the sign was commenced.
Her ladyship referred to para [111] of Lord Justice Kitchin's judgment in Comic Enterprises v Twentieth Century Fox Film Corp [2016] EWCA Civ 41; [2016] ETMR 22:
Her ladyship referred to para [111] of Lord Justice Kitchin's judgment in Comic Enterprises v Twentieth Century Fox Film Corp [2016] EWCA Civ 41; [2016] ETMR 22:
The judge noted at [72] that not all of those conditions were in issue. Those in dispute were (v), (vii), (viii) (a) and (c) and (ix).
Condition (v) - The Sign must be identical or similar to the Trade Mark
It was common ground that the comparison between the sign and mark would be considered from the perspective of the average consumer (per para [48] of Mr Justice Kitchin's judgment in Julius Sämaan Ltd v Tetrosyl Ltd [2006] FSR 42). The judge directed herself that the average consumer is a member of the public who is familiar with the trade mark and exposed to and likely to rely upon the allegedly infringing sign. Such a person is "deemed to be reasonably well informed and reasonably circumspect and observant, but…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…[his] attention varies according to the category of goods or services in question" (Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] ETMR 17, [2012] EWCA Civ 24, [2012] FSR 19 ay [52 (d)]).
Referring to para [52 9d)] of Lord Justice Kitchin's judgment in Specsavers, her ladyship directed herself that the comparison between a trade mark and sign must normally be carried out by reference to the visual, aural and conceptual similarities of the marks having regard to the "overall impressions created by the marks" and bearing in mind their distinctive and dominant components. She added that it was not appropriate to concentrate on the similarities to the exclusion of the differences between the mark and the sign or, where there is a composite mark comprised of both graphic and word elements, systematically to regard the word elements as dominant.
Referring to para [52 9d)] of Lord Justice Kitchin's judgment in Specsavers, her ladyship directed herself that the comparison between a trade mark and sign must normally be carried out by reference to the visual, aural and conceptual similarities of the marks having regard to the "overall impressions created by the marks" and bearing in mind their distinctive and dominant components. She added that it was not appropriate to concentrate on the similarities to the exclusion of the differences between the mark and the sign or, where there is a composite mark comprised of both graphic and word elements, systematically to regard the word elements as dominant.
Referring to para 11-089 of the 16th edition of Kerly's Law of Trade Marks and Trade Names, she said that it could not be assumed that because an element of the mark and the sign is identical that the mark and sign are similar unless the identical part constitutes the dominant element in the overall impression created by each mark, such that all other components are insignificant. It was 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 though 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 (Specsavers at [52 (d) and (e)]).
Condition (vii) - There must be a Link between the Sign and the Registered Mark
Relying on Case C-408/01, Adidas-Salomon AG and another v Fitnessworld Trading Ltd. [2003] EUECJ C-408/01, [2004] CEC 3, [2004] 1 CMLR 14, [2004] FSR 21, [2004] 2 WLR 1095, [2003] ECR I-2537, [2003] ECR I-12537, [2004] ETMR 10, [2004] Ch 120, and para [20] of Specsavers, the judge directed herself that ]nfringement under s.10 (3) requires a degree of similarity between the mark and the sign such that the average consumer makes a connection between them. She added that it was not necessary for the degree of similarity to create a likelihood of confusion. It must, however, be such that the average consumer establishes a link between the mark and the sign. Such link is to be assessed globally having regard to all the circumstances of the case. Calling the mark to mind in the thoughts of the average consumer is enough to establish such a link (para [122] of Specsavers, [110] of Comic and [60] of C-252/07 Intel Corp Inc v CPM United Kingdom Ltd. [2008] ECR I-8823; [2009] RPC 1).
Relevant factors include "(i) the degree of similarity between the conflicting marks; (ii) the nature of the goods or services for which the conflicting marks were registered, including the degree of closeness or dissimilarity between those goods or services, and the relevant section of the public; (iii) the strength of the earlier mark's reputation; (iv) the degree of the earlier mark's distinctive character, whether inherent or acquired through use; and (v) the existence of the likelihood of confusion on the part of the public."
Having regard to para [87] of Specsavers, the judge further directed herself that "the court must consider the matter from the perspective of the average consumer of the goods or services in question and must take into account all the circumstances of that use that are likely to operate in that average consumer's mind in considering the sign and the impression it is likely to make on him. The sign is not to be considered stripped of its context."
Having regard to para [87] of Specsavers, the judge further directed herself that "the court must consider the matter from the perspective of the average consumer of the goods or services in question and must take into account all the circumstances of that use that are likely to operate in that average consumer's mind in considering the sign and the impression it is likely to make on him. The sign is not to be considered stripped of its context."
Condition (viii) (a)) - It must give Rise to Detriment to the Distinctive Character of the Mark
Referring to para [31] of Mr Daniel Alexander QC's judgment in Planetart LLC v Photobox Ltd and another (Rev 2) [2020] Bus LR 2048, [2020] WLR(D) 266, [2020] EWHC 713 (Ch) in which the deputy judge himself referred to para [113] of Comic and para [29] of Intel, Mrs Justice Joanna Smith said that detriment is caused when a mark's ability to identify the goods or services for which it is registered and used as coming from the proprietor of that mark is weakened. That occurs where the use of the later mark leads to the dispersion of the identity and hold upon the public mind of the earlier mark. She added that that is notably the case when the earlier mark, which used to arouse immediate association with the goods and services for which it is registered, is no longer capable of doing so.
Referring to [107] of Argos Ltd v Argos Systems Inc [2018] EWCA Civ 2211. her ladyship observed that detriment will be established where there is evidence of a change in the economic behaviour of the average consumer of the goods or services for which the trade mark is registered or a serious likelihood that such change will occur in the future. Referring again to para [31] of Planetart, she said that it was immaterial for the purposes of assessing whether the use of the later mark is or would be detrimental to the distinctive character of the earlier mark, whether or not the proprietor of the later mark draws real commercial benefit from the distinctive character of the earlier mark. Quoting para [31] of Planetart, she said:
"A serious risk of detriment may be established by deduction, but any such deduction cannot be supposition and must instead be founded properly on all the circumstances of the case and the nature of the trade in issue."
She noted that actual evidence of a change in the economic behaviour of consumers is often difficult to obtain. Moreover, where the distinctiveness of a mark is whittled away, the detrimental impact can, in some circumstances, be reflected just as much in the evasive action that a proprietor needs to take to re-establish distinctiveness. Where a rival creeps up on a brand, a proprietor is sometimes forced to edge away from the newcomer at some cost or devote resources to amplifying its brand message to avoid its distinctiveness being drowned out by the alleged infringer. Where the evidence, taken as a whole, shows that damage of that kind is sufficiently likely, it is a corollary of the statement of principle in Comic that it is not invariably necessary for there to be actual evidence that consumers have changed their behaviour as a result of the adoption of the rival mark.
She concluded that the descriptiveness of the respective marks is the key element. A trader has less right to complain that its brand is being diluted if it has chosen a mark which is of limited distinctiveness in the first place. Nor can a trader complain that precisely because its brand is so vulnerable to loss of distinctiveness and swamping by a newcomer using it descriptively that this gives rise to a claim for dilution. Nonetheless, these propositions must have regard to the precise marks in issue and the extent to which they only consist of descriptive terms.
Condition (viii) (c) - It must give Rise to Unfair Advantage being taken of the Distinctive Character or Repute of the Trade Mark
Condition (viii) (c) - It must give Rise to Unfair Advantage being taken of the Distinctive Character or Repute of the Trade Mark
Referring to para [41] of the CJEU's judgment in Case C-87/07 L'Oréal SA and others v Bellure NV and others [2009] EUECJ C-487/07, [2010] RPC 1, [2009] ETMR 55, [2009] ECR I-5185, [2010] Bus LR 303. Mrs Justice Joanna Smith said that taking unfair advantage of the distinctive character or the repute of a trade mark or free-riding relates to "the advantage taken by the third party as a result of the use of the identical or similar sign". It covers cases where, "by reason of the transfer of the mark or of the characteristics which it projects to the goods identified by the identical or similar sign, there is clear exploitation on the coattails of the mark with a reputation."
- the strength of the mark's reputation
- the degree of distinctive character of the mark,
- the degree of similarity between the marks at issue and
- the nature and degree of proximity of the goods or services concerned.
Quoting [49] of that judgment, she continued:
"Where a third party attempts through the use of a sign similar to a mark with reputation to ride on the coat tails of that mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of his own in that regard, the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark, the advantage resulting from such use must be considered to be an advantage that had been unfairly taken of the distinctive character or the repute of that mark."
"Where a third party attempts through the use of a sign similar to a mark with reputation to ride on the coat tails of that mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation and without being required to make efforts of his own in that regard, the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark, the advantage resulting from such use must be considered to be an advantage that had been unfairly taken of the distinctive character or the repute of that mark."
Citing para [315] of Mr Justice Arnold's judgment in Sky Plc and others v Skykick UK Ltd and another :[2018] ETMR 23, [2018] RPC 5, [2018] EWHC 155 (Ch), paras [109] and [110] of the same judge's judgment in Jack Wills Ltd v House of Fraser (Stores) Ltd [2014] EWHC 110 (Ch), [2014] FSR 39 and paras [30] to [33] of Mr Justice Adams Johnson's judgment in Monster Energy Company v Red Bull GmbH [2022] EWHC 2155 (Ch), Mrs Justice Joanna Smith directed herself that while a defendant's conduct is most likely to be regarded as unfair "where he intends to take advantage of the reputation and goodwill of the trade mark", it is not necessary to prove that the defendant subjectively intended to exploit the reputation and goodwill of the mark in order to establish that the use of the sign amounts to unfair advantage. It will be sufficient if the objective effect of the use complained of is to enable the defendant to benefit from the reputation and goodwill of the trade mark. However, where intention is present, it is likely to provide real assistance to a claimant's case.
Condition (ix) - Without Due Cause
Relying on para [120] of Comic, her ladyship said that should detriment or unfair advantage be established then it is for the proprietor of the later sign to show that there is due cause for its use. Referring to paras [41] to [46] of Case C‑65/12 Leidseplein Beheer BV v Red Bull GmbH, she observed that the concept of "due cause" includes not only objectively overriding reasons but also the subjective interests of the third party using a sign that is identical or similar to a mark with a reputation.
The CCP Sign
Lidl had originally pleaded that the infringing sign was a yellow circle against a blue background without any text. Tesco applied to strike out Lidl's statement of case on the ground that Tesco had never used or intended to use that sign without text. That application prompted Lidl to amend its particulars of claim. After further argument at the pre-trial review and at trial, the judge ruled that the sign that would be compared to the registered marks would be the yellow circle against the blue background together with the words "Clubcard Price" or "Clubcard Prices" and pricing information. She referred to that sign as the "CCP sign". It was common ground that Tesco started to use the CCP sign in September 2020.
Reputation
The learned judge quoted para [35] of the General Court's judgment in n Case T-'215/03, SIGLA v OHIM and another [2007] ETMR 79, [2007] EUECJ C-215/03, [2007] ECR II-711, [2007] Bus LR D53::
"…the primary function of a mark is unquestionably that of an 'indication of origin' (see the seventh recital in the preamble to Regulation No 40/94). The fact remains that a mark also acts as a means of conveying other messages concerning, inter alia, the qualities or particular characteristics of the goods or services which it covers or the images and feelings which it conveys, such as, for example, luxury, lifestyle, exclusivity, adventure, youth. To that effect the mark has an inherent economic value which is independent of and separate from that of the goods and services for which it is registered. The messages in question which are conveyed inter alia by a mark with a reputation or which are associated with it confer on that mark a significant value which deserves protection, particularly because, in most cases, the reputation of a mark is the result of considerable effort and investment on the part of its proprietor."
"…the primary function of a mark is unquestionably that of an 'indication of origin' (see the seventh recital in the preamble to Regulation No 40/94). The fact remains that a mark also acts as a means of conveying other messages concerning, inter alia, the qualities or particular characteristics of the goods or services which it covers or the images and feelings which it conveys, such as, for example, luxury, lifestyle, exclusivity, adventure, youth. To that effect the mark has an inherent economic value which is independent of and separate from that of the goods and services for which it is registered. The messages in question which are conveyed inter alia by a mark with a reputation or which are associated with it confer on that mark a significant value which deserves protection, particularly because, in most cases, the reputation of a mark is the result of considerable effort and investment on the part of its proprietor."
She noted that Mr Justice Arnold had said at para [115] of his judgment in Enterprise Holdings, Inc v Europcar Group UK Ltd and another [2015] EWHC 17 (Ch), [2015] ETMR 16, [2015] FSR 22 that ut is not particularly onerous to prove that a mark has a reputation. Tesco accepted that the mark with text had a reputation but denied that the wordless mark had a reputation or was even distinctive.
Use of the CCP Sign
It was common ground that Tesco had used the CCP sign in the UK in the course of trade in relation to identical or similar goods or services for which the Lidl marks had been registered without Lidl's consent.
It was common ground that Tesco had used the CCP sign in the UK in the course of trade in relation to identical or similar goods or services for which the Lidl marks had been registered without Lidl's consent.
Similarity
Although the judge acknowledged differences between the marks with text and the CCP sign such as the Club Card text on the CCP sign and the thin red circle on the marks with text, they were outweighed by the similarities. Emails between Tesco's advertising staff showed that they were aware of the similarities as were members of the public.
Link
In all the circumstances and approaching the question from a global standpoint, the judge was satisfied that Lidl had established the necessary link. There was clear evidence of both origin and price match confusion together with emails that Tesco had anticipated the potential for confusion. She considered that the average reasonably observant consumer encountering the CCP sign in the real world at the date of the launch of the Clubcard Price campaign would draw a link between the uses of the CCP sign and the marks with text.
Intention
The judge rejected Lidl's allegation that the use of the CCP sign was intended to, and did, cause members of the public to call to mind Lidl's business and marks. However, in closing Lidl submitted that such use had "likely resulted in 'a subtle but insidious transfer of image' from Lidl's Marks to the [CCP sign] in the minds of some consumers, whether that was Tesco's intention or not," She observed that the case that Tesco had to meet was that the objective effect of the use of the CCP sign by Tesco had been to enable Tesco to benefit from the reputation and goodwill of Lidl's marks.
Detriment
As more than 2 years had elapsed since the CCP signs were first used, the judge said that she required evidence of an actual change of behaviours on the part of consumers rather than evidence of the likelihood of such detriment. She accepted evidence of Lidl's expenditure on additional advertising to reassert the Lidl brand as evidence of detriment. She found that Lidl has established detriment to the distinctive character of its marks by having to take evasive action in the form of corrective advertising.
Unfair Advantage
Although that finding was sufficient to decide the claim under s.10 (3) the learned judge went on to consider whether Lidl was also able to establish unfair advantage. Her ladyship said at [173] that unfair advantage was concerned not with any detriment caused to Lidl's marks, but with the advantage (if any) taken by Tesco as a result of the use of the CCP sign. Because of the resemblance of the CCP sign to Lidl's marks, she was of opinion that Tesco had taken unfair advantage of the distinctive reputation which resides in the Lidl marks for low price discounted value. That was the objective effect of the creation of the link between the CCP signs and Lidl's reputation despite her finding that there had been no subjective intention to achieve that end.
Due Cause
As the parties could not agree on the stringency of the test for whether a party had due cause to use a sign that was identical or similar to a mark with a reputation, her ladyship referred to paras [41] to [45] of Mr Alexander's judgment in PlanetArt which itself referred to Leidesplein:
"[41] …the difficulties in this area are not so much conceptual but arise in the practical application of a test of this kind to a range of cases. In my view, there are several points to bear in mind in considering whether that provision comes into play.
[42] First, having regard to the general principles of trade mark law, which require consideration of marks as a whole, the question of whether (for example) there are interests of other economic operators having signs capable of denoting their products and services justifying the use of the sign must be evaluated by reference to the mark and sign taken as a whole. In the case of a mark composed of a number of elements, the court should consider whether those interests should reasonably permit the use of all of those elements in combination, not merely some of them.
[43] Secondly, the approach should not be so strict that it is only where a defendant proves that there is no practical alternative at all to the use of the sign in question that a defendant's sign would be regarded as being used with due cause. There has to be some degree of latitude, which will depend on the circumstances of the trade. However, it must be borne in mind that this provision only comes into play after it has been found that there is not only a link between the registered trade mark and the sign but also that it has taken unfair advantage or is detrimental to the distinctive character of the trade mark in the sense that the case law has required. That does raise the bar for a defendant to show that the use of the sign is nonetheless with due cause.
[44] Thirdly, where the registered mark includes descriptive elements (or other elements which are less likely to have trade mark significance—such as a colour or design) and the case for application of s.10(3) is largely based on the common use of such elements, the easier will it be for a defendant to show that the use of those elements is with due cause. That approach gives effect to the purpose of the law articulated in Leidesplein and Argos.
[45] Fourthly, cases are highly fact dependent but the court should seek a proportionate response. The greater the intrusion into the trade mark proprietor's legitimate interests in the ways that the law seeks to protect against, the stronger will need to be the defendant's justification for nonetheless using the sign in question".
[44] Thirdly, where the registered mark includes descriptive elements (or other elements which are less likely to have trade mark significance—such as a colour or design) and the case for application of s.10(3) is largely based on the common use of such elements, the easier will it be for a defendant to show that the use of those elements is with due cause. That approach gives effect to the purpose of the law articulated in Leidesplein and Argos.
[45] Fourthly, cases are highly fact dependent but the court should seek a proportionate response. The greater the intrusion into the trade mark proprietor's legitimate interests in the ways that the law seeks to protect against, the stronger will need to be the defendant's justification for nonetheless using the sign in question".
Referring to para [123] of Comic, the judge observed that there was plainly a balancing exercise between, on the one hand, the interests which the proprietor of a trade mark had in safeguarding its essential function and, on the other hand, the interests of other economic operators in having signs capable of denoting their products and services. Given the context, the test will be "relatively stringent", as Mr Justice Kitchen had observed in para [84] of his judgment in Julius Sämaan. The mere fact that the sign complained of was innocently adopted would not be sufficient to invoke the exception. There must be something more to satisfy the court that the rights of the claimant must yield to the use of the sign.
Tesco advanced several arguments under this head but Mrs Justice Joanna Smith did not consider any of them to be sufficient to justify the detriment to Lidl's marks or the unfair advantage that had been taken of them.
Passing off
"First, [a claimant] must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying 'get-up' (whether it consists simply of a brand name or trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services.
Secondly, [a claimant] must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods and services of the [claimant]. Whether the public is aware of the [claimant's] identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the [claimant]. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is a little or no public awareness of the identity of the proprietor of the brand name.
Thirdly, [the claimant] must demonstrate that he suffers, or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the [claimant]."
Secondly, [a claimant] must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods and services of the [claimant]. Whether the public is aware of the [claimant's] identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the [claimant]. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is a little or no public awareness of the identity of the proprietor of the brand name.
Thirdly, [the claimant] must demonstrate that he suffers, or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the [claimant]."
She also mentioned the following additional points that Lord Justice Arnold had emphasized in Glaxo Wellcome UK Ltd and another v Sandoz Ltd and others [2019] EWHC 2545 (Ch), [2019] RPC 27 at para [263] of her judgment:
"(i) The date on which the three elements identified in Reckitt must be assessed is the date when the defendant commences the acts complained of ([157]).
(ii) Passing off requires deception – it is not enough if members of the public are merely caused to wonder if there is a connection. ([158]-[159]).
(iii) For there to be passing off, a substantial number of members of the public must be misled. It is insufficient that careless or indifferent people may be led into error ([160]). (To this point I add that while the requirement is that a substantial number of a claimant's actual or potential customers would be deceived, it is not necessary to show that most of them are (see PlanetArt at [78]). As the Court of Appeal made clear in Lumos Skincare v Sweet Squared [2013] EWCA Civ 590 (per Lloyd LJ at [60] quoting Neutrogena): 'There is passing off even if most of the people are not fooled most of the time but enough are for enough of the time. By "enough" I mean a substantial number of the plaintiff's customers or potential customers deceived for there to be a real effect on the plaintiff's trade or goodwill'.
(iv) The correct approach was well described by Jacob J in Neutrogena at page 482 ([161]):
'The judge must consider the evidence adduced and use his own common sense and his own opinion as to the likelihood of deception. It is an overall 'jury' assessment involving a combination of all these factors, see 'GE' Trade Mark [1973] R.P.C. 297 at page 321. Ultimately the question is one for the court, not for the witnesses. It follows that if the judge's own opinion is that the case is marginal, one where he cannot be sure whether there is a likelihood of sufficient deception, the case will fail in the absence of enough evidence of the likelihood of deception. But if that opinion of the judge is supplemented by such evidence then it will succeed. And even if one's own opinion is that deception is unlikely though possible, convincing evidence of deception will carry the day. The Jif lemon case (Reckitt & Colman Products Ltd. v. Borden Inc. [1990] RPC 341) is a recent example where overwhelming evidence of deception had that effect. It was certainly my experience in practice that my own view as to the likelihood of deception was not always reliable. As I grew more experienced I said more and more 'it depends on the evidence'.
(v) It is not sufficient for a claimant to prove that the public recognises a particular attribute and associates it with the claimant – mere recognition is not enough, the relevant public needs to perceive the attribute as a badge of origin ([170]-[173]).
(vi) Passing off is not confined to misrepresentation as to trade origin, and may extend to misrepresentation as to equivalence ([174]-[181]).
(vii) However, as Arnold LJ said at [181]:
"In the light of these authorities, counsel for the Defendants did not dispute that, in principle, a misrepresentation as to equivalence could be actionable as passing off, but submitted that it was necessary to consider with care what goodwill the claimant owned and whether any misrepresentation was made by the indicia complained of which was likely to damage the claimant's goodwill. I accept that submission."
(viii) It is not a necessary ingredient of passing off that the misrepresentation was deliberate. While the intentions of the defendant may have evidential relevance, the misrepresentation may be an innocent one ([182]-[183]). Thus as Lord Simonds said in Office Cleaning Services Ltd v Westminster Window and General Cleaners Ltd (1946) 63 RPC 39 at page 42 '…if the intention to deceive is found, it will readily be inferred that deception will result. Who knows better than the trader the mysteries of his trade?'
([185]). It is likely to be important to distinguish between a conscious decision to live dangerously and one who intends to cause deception and deliberately seeks to take the benefit of another trader's goodwill ([187]-[188])."
The judge also quoted para [49] of PlanetArt:
"First, in most cases…the central question is whether there is a misrepresentation…this is the critical element of the tort. A finding of misrepresentation, or its absence, informs but is not conclusive of the other two requirements of the tort. If there is a misrepresentation it is often likely that it is because the claimant has developed sufficient goodwill. So the presence of misrepresentation is itself a test of goodwill."
"First, in most cases…the central question is whether there is a misrepresentation…this is the critical element of the tort. A finding of misrepresentation, or its absence, informs but is not conclusive of the other two requirements of the tort. If there is a misrepresentation it is often likely that it is because the claimant has developed sufficient goodwill. So the presence of misrepresentation is itself a test of goodwill."
The Passing-off Claim
The judge said in para [266] of her judgment that Lidl's passing off was "that by reason of its use of the CCP signs in connection with the Tesco business and goods, Tesco has misrepresented 'that products sold by Tesco share the qualities of those of Lidl, including in particular, that the goods offered for sale by Tesco in connection with the sign are of an equivalent good standard, and sold at the same or equivalent price, as similar products sold in the course of the Lidl business; or that Tesco has otherwise 'price matched' the prices of its products with those of Lidl; in each case contrary to fact"' She characterized that claim as "a claim of misrepresentation as to equivalence."
Goodwill
Misrepresentation
Lidl alleged that Tesco's adoption of the CCP signs induced a substantial number of Lidl's customers to believe that there was a relationship between Clubcard Prices and Lidl's prices, In other words, a substantial number of Lidl customers were led to believe that the Clubcard Price was the same or lower than the Lidl price for equivalent goods. That mistaken belief was said to be deceiving consumers and causing damage to Lidl because price-sensitive shoppers would purchase goods at Tesco rather than Lidl.
The judge accepted Lidl's submissions that a substantial number of consumers had been deceived. She rejected Tesco's contention that Tesco's princes were largely the same or lower than Lidl's. Although not everybody would be fooled by the resemblance of the Tesco CCP signs to the Lidl marks there was evidence that some would be.
Damage
Having proved goodwill and misrepresentation it followed that there would be damage,. The judge held that it would be the same as the detriment for trade mark infringement. There would have been a loss of sales had Lidl not spent money on additional advertising to correct Tesco's misrepresentation.
Copyright Infringement
Lidl alleged that the wordless mark and the mark with text were original artistic works in which copyright subsists and that Tesco had infringed a substantial part of those works by making the CCP signs without Lidl's licence. Tesco denied the subsistence of copyright, Lidl's title to any such copyright and copying,. The disputed issues were listed in para [279] of Mrs Justice Joanna Smith's judgment::
"i) Whether copyright subsists in each of (i) the Mark with Text and/or (ii) the Wordless Mark as an artistic work;
ii) If so, whether copyright in each of the Works is owned by Lidl; and
iii) Whether Tesco copied the Works or either of them and, if so, whether such copying was in respect of a substantial part."
Subsistence of Copyright
The judge directed herself that copyright subsists in original artistic works pursuant to s.1 (1) (a) of the Copyright Designs and Patents AScy 1988 and that an artistic work includes a "graphic work" within the meaning of s.4 (2) pursuant to s.4 (1). For the meaning of "original," she referred to Case C-5/08 Infopaq International A/S v Danske Dagblades Forening [2010] FSR 20, [2009] ECDR 16, [2009] ECR I-6569, [2012] Bus LR 102, ECLI:EU:C:2009:465, [2009] EUECJ C-5/08, EU:C:2009:465 which defined "original" as the expression of the intellectual creation of the author of the work. She also considered Case C-683/17 Cofemel v G-Star Raw CV EU:C:2019:721, ECLI:EU:C:2019:721, [2019] EUECJ C-683/17, [2020] ECDR9 at [29]-[31]:
"29. The concept of "work"…[f]irst…entails that there exists an original subject matter, in the sense of being the author's own intellectual creation. Second, classification as a work is reserved to the elements that are the expression of such creation…
30. As regards the first of those conditions…if a subject matter is to be capable of being regarded as original, it is both necessary and sufficient that the subject matter reflects the personality of its author, as an expression of his free and creative choices…
31. On the other hand, when the realisation of the subject matter has been dictated by technical considerations, rules or other constraints, which have left no room for creative freedom, that subject matter cannot be regarded as possessing the originality required for it to constitute a work…"
Tesco submitted that the combination of the yellow circle with the red line against the blue background together with the text was insufficient to meet the test of originality because it was too simple. The judge rejected that submission because simplicity of design and/or a low level of artistic quality does not preclude originality as Mr Justice Whitford had noted in Karo Step Trade Mark [1977] R.P.C. 255 at page 273 and Richard McCombe QC in his judgment in IPC Magazines v MGN [1998] FSR 43.
The judge said at para [289]:
"Someone in the employ of Lidl took the Lidl text and the yellow circle with the red border and superimposed them on a blue background to create the Mark with Text. On balance, I consider that this is likely to have involved time, labour and creative freedom (even if the artistic quality involved is not 'high'). Tesco's own evidence as to the various combinations of apparently basic shapes and colours considered by its own designers in arriving at a decision as to the CCP Signs tends, in my judgment, to bear this out."
Accordingly, she found that the mark with text, by its combination of text, colours and shapes, had the originality required by the statute. She, therefore, found that the mark with text qualified for copyright protection in the United Kingdom.
Title
Pursuant to s.104 of the Act, it was to be presumed that the second claimant was the owner of the copyright in the mark with text. The registration of the device as a trade mark was consistent with ownership, In the absence of evidence to the contrary she held that Lidl was entitled to the copyright.
"Someone in the employ of Lidl took the Lidl text and the yellow circle with the red border and superimposed them on a blue background to create the Mark with Text. On balance, I consider that this is likely to have involved time, labour and creative freedom (even if the artistic quality involved is not 'high'). Tesco's own evidence as to the various combinations of apparently basic shapes and colours considered by its own designers in arriving at a decision as to the CCP Signs tends, in my judgment, to bear this out."
Accordingly, she found that the mark with text, by its combination of text, colours and shapes, had the originality required by the statute. She, therefore, found that the mark with text qualified for copyright protection in the United Kingdom.
Title
Pursuant to s.104 of the Act, it was to be presumed that the second claimant was the owner of the copyright in the mark with text. The registration of the device as a trade mark was consistent with ownership, In the absence of evidence to the contrary she held that Lidl was entitled to the copyright.
Copying
The judge referred to s.16 (1), s.17 (1), s.18 (2) and s.23 of the Copyright, Designs and Patents Act 1988. Noting s.16 (3) she observed that the entitlement of a copyright owner to stop acts of infringement is not limited to the copying of the entire work, but also extends to "any substantial part" of the work, whether "directly or indirectly" and "it is immaterial whether any intervening acts themselves infringe copyright". She referred to the following paragraphs of Her Honour Judge Melissa Clarke's judgment in ATB Sales v Rich Energy and others [2019] EWHC 1207 (IPEC):
[14] …when considering whether a 'substantial part' of a copyright work has been taken for the purposes of section 16 (3) CDPA 88, what matters is the extent to which that part contains elements which express the intellectual creation of the author. If it contains elements which express the intellectual creation of the author, then it is a substantial part. If it does not, it is not.
15. It is common ground that an essential part of proving copying is an unbroken causal connection between the original work and the infringing copy. That causal connection can be either direct or indirect pursuant to section 16(3)(b) CDPA 88. A prima facie case of copying may arise if there is substantial similarity and proof of access to the original work by the alleged infringers. In the leading authority Designers Guild v Russell Williams Textiles [2000] 1 WLR 2416 at 2425, Lord Millet expressed the court's task as follows:
[14] …when considering whether a 'substantial part' of a copyright work has been taken for the purposes of section 16 (3) CDPA 88, what matters is the extent to which that part contains elements which express the intellectual creation of the author. If it contains elements which express the intellectual creation of the author, then it is a substantial part. If it does not, it is not.
15. It is common ground that an essential part of proving copying is an unbroken causal connection between the original work and the infringing copy. That causal connection can be either direct or indirect pursuant to section 16(3)(b) CDPA 88. A prima facie case of copying may arise if there is substantial similarity and proof of access to the original work by the alleged infringers. In the leading authority Designers Guild v Russell Williams Textiles [2000] 1 WLR 2416 at 2425, Lord Millet expressed the court's task as follows:
'The first step in an action for infringement of artistic copyright is to identify those features of the defendant's design which the plaintiff alleges have been copied from the copyright work. The court undertakes a visual comparison of the two designs, noting the similarities and differences. The purpose of the examination is not to see whether the overall appearance of the two designs is similar, but to judge whether the particular similarities relied on are sufficiently close, numerous or extensive to be more likely to be the result of copying than coincidence. It is at this stage that similarities may be disregarded because they are commonplace, unoriginal or consist of general ideas. If the plaintiff demonstrates sufficient similarity, not in the works as a whole but in the features which he alleges have been copied, and establishes that the defendant had prior access to the copyright work, the burden passes to the defendant to satisfy the judge that, despite the similarities, they did not result from copying. Even at this stage, therefore, the inquiry is directed to the similarities rather than the differences. This is not to say that the differences are unimportant. They may indicate an independent source and so rebut any inference of copying.'"
Referring to Lord Hoffmann's speech in Designers Guild, she said at [295]:
"What is substantial is a question to be answered qualitatively rather than quantitatively. The 'part' which is regarded as substantial can be a feature or combination of features of the work, abstracted from it rather than forming a discrete part."
The judge noted that there will rarely be direct evidence of copying (which will usually be done in secret and vehemently denied). She directed herself that accordingly a close similarity between the claimant's design and the alleged infringing article together with the opportunity for the alleged copier to have access to the claimant's design or work "raises an inference of copying." She referred to Lord Wright's speech in King Features Syndicate Inc v O and M Kleeman Ltd [1941] AC 417 at 436:
"It is rare in intellectual property cases for there to be direct evidence of copying of someone else's copyrights or designs. Plagiarists do their copying in secret. The courts proceed on the basis that a close similarity between the claimant's design and the alleged infringing article, coupled with the opportunity for the alleged copier to have access to the claimant's design or work, raises an inference of copying. It is then up to the defendant to rebut the inference by evidence which shows that the apparent similarity arose in some other way. In Ibcos Computers Ltd v Barclays Finance Ltd [1994] FSR 275 at 297, Jacob J said that 'the concept of sufficient similarities shifting the onus on to the defendant to prove non-copying is well recognised in copyright law'. He added that he thought that the proposition 'is not so much one of law as of plain rational thought'"
Mrs Justice Joanna Smith said at para [299]:
"It is common ground that Tesco was well aware of, and had access to, Lidl's Marks. A visual comparison of the CCP Signs and the Mark with Text indicates that the similarities (the blue background with the yellow circle superimposed on it) are sufficiently close that they are more likely to be the result of copying than mere coincidence – I refer back to my analysis in the context of similarity and link under the heading of trademark infringement. In my judgment (considering the question quantitively rather than qualitatively) the blue background with the yellow circle plainly forms a substantial part of the Mark with Text. In the circumstances, I agree with Lidl that it is for Tesco to provide an explanation for that similarity."
"It is common ground that Tesco was well aware of, and had access to, Lidl's Marks. A visual comparison of the CCP Signs and the Mark with Text indicates that the similarities (the blue background with the yellow circle superimposed on it) are sufficiently close that they are more likely to be the result of copying than mere coincidence – I refer back to my analysis in the context of similarity and link under the heading of trademark infringement. In my judgment (considering the question quantitively rather than qualitatively) the blue background with the yellow circle plainly forms a substantial part of the Mark with Text. In the circumstances, I agree with Lidl that it is for Tesco to provide an explanation for that similarity."
While accepting that there had been no deliberate decision to copy Lidl's designs Tesco failed to give a satisfactory explanation for the similarity between the CCP sign and the mark with text.
The Counterclaim
Tesco counterclaimed for the invalidation of the wordless mark on the ground that it was incapable of distinguishing Lidl's goods and services and that it had been registered in bad faith. Alternatively, Tesco sought its revocation on the ground that it had never been used.
At [231] of her judgment, the learned judge said that then the results of a market survey by YouGov provided strong evidence that the wordless mark, used on its own, has acquired the ability to demonstrate exclusive origin. It was perceived by a significant proportion of the relevant class of consumers to indicate the goods and services of Lidl.
Although the wordless mark had never been used on its own her ladyship found that the wordless mark was itself perceived by consumers as a trade mark and that Lidl had established genuine use of the wordless mark through use of the mark with text.
As for the allegation of bad faith, the learned judge referred to s.3 (7) and s.47 (1) of the Trade Marks Act 1994. She considered Lord Justice Arnold's analysis of the case law on bad faith in Lidl Great Britain Lt v Tesco Stores Ltd [2023] E.T.M.R. 6:
"[15]. The provisions on bad faith contained in the Directives and in the Regulations have been interpreted by the Court of Justice of the European Union in four cases: Case Chocoladefabriken Lindt & Sprungli AG v Franz Hauswirth GmbH (C-529/07) EU:C:2009:361, Case Malaysia Dairy Industries Pte Ltd v Ankenaevnet for Patenter og Varemaerker (C-320/12) EU:C:2013:435, Case Koton Magazacilik Tekstil Sanayi ve Ticaret v EUIPO (C-104/18) EU:C:2019:724 and Case Sky plc v SkyKick UK Ltd (C-371/18) EU:C:2020:45 ("Sky CJEU"). There is also a body of case law of the General Court, including Case Psytech International Ltd v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) (T-507/08) EU:T:2011:253, Case pelicantravel.com sro v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM) (T-136/11) EU:T:2012:689, Case Target Ventures Group Ltd v EUIPO (T-273/19) EU: T:2020:510 and Case Hasbro Inc v European Union Intellectual Property Office (EUIPO) (T-663/19) EU: T:2021:211. All of this case law except for Hasbro is retained EU law, and neither party suggested that this Court should depart from it. As for Hasbro, this constitutes persuasive authority, particularly since it is a decision of an Extended Composition of the Sixth Chamber of the General Court (permission to appeal from which was refused by the CJEU by order dated 1 December 2021 [EU:C:2021:983]), and neither party suggested otherwise.
[16] In Sky Ltd (formerly Sky Plc) v Skykick UK Ltd [2021] EWCA Civ 1121 ("Sky CA") Sir Christopher Floyd, with whom Newey and Nugee LJJ agreed, set out at [67] 13 points of principle established by the cases I have listed in paragraph 15 above (with the exception of Target Ventures, which was not referred to in Sir Christopher's judgment and may not have been cited) as follows (so far as relevant for present purposes):
…
[16] In Sky Ltd (formerly Sky Plc) v Skykick UK Ltd [2021] EWCA Civ 1121 ("Sky CA") Sir Christopher Floyd, with whom Newey and Nugee LJJ agreed, set out at [67] 13 points of principle established by the cases I have listed in paragraph 15 above (with the exception of Target Ventures, which was not referred to in Sir Christopher's judgment and may not have been cited) as follows (so far as relevant for present purposes):
…
'[2] Bad faith is an autonomous concept of EU trade mark law which must be given a uniform interpretation in the EU: Malaysia Dairy Industries at [29].
[3] The concept of bad faith presupposes the existence of a dishonest state of mind or intention, but dishonesty is to be understood in the context of trade mark law, i.e. the course of trade and having regard to the objectives of the law namely the establishment and functioning of the internal market, contributing to the system of undistorted competition in the Union, in which each undertaking must, in order to attract and retain customers by the quality of its goods or services, be able to have registered as trade marks signs which enable the consumer, without any possibility of confusion, to distinguish those goods or services from others which have a different origin: Lindt at [45]; Koton Magazacilik at [45].
[4] The concept of bad faith, so understood, relates to a subjective motivation on the part of the trade mark applicant, namely a dishonest intention or other sinister motives. It involves conduct which departs from accepted standards of ethical behaviour or honest commercial and business practices: Hasbro at [41].
[5] The date for assessment of bad faith is the time of filing the application: Lindt at [35].
[6] It is for the party alleging bad faith to prove it: good faith is presumed until the contrary is proved: Pelikan at [21] and [40].
[7] Where the court or tribunal finds that the objective circumstances of a particular case raise a rebuttable presumption of lack of good faith, it is for the applicant to provide a plausible explanation of the objectives and commercial logic pursued by the application: Hasbro at [42].
[8] Whether the applicant was acting in bad faith must be the subject of an overall assessment, taking into account all the factors relevant to the particular case: Lindt at [37].
[9] For that purpose, it is necessary to examine the applicant's intention at the time the mark was filed, which is a subjective factor which must be determined by reference to the objective circumstances of the particular case: Lindt at [41] - [42].
[10] Even where there exist objective indicia pointing towards bad faith, however, it cannot be excluded that the applicant's objective was in pursuit of a legitimate objective, such as excluding copyists: Lindt at [49].
11. Bad faith can be established even in cases where no third party is specifically targeted, if the applicant's intention was to obtain the mark for purposes other than those falling within the functions of a trade mark: Koton Magazacilik at [46].
12. It is relevant to consider the extent of the reputation enjoyed by the sign at the time when the application was filed: the extent of that reputation may justify the applicant's interest in seeking wider legal protection for its sign: Lindt at [51] to [52].
…'
[17] Point 3 in this list requires clarification. The reference to Lindt at [45] appears to be a mistake since there is no reference to "dishonesty" in that paragraph or anywhere else in the Court of Justice's reasoning from [34] to [53]. Furthermore, the Court largely endorsed the reasoning of Advocate General Sharpston in her opinion, and specifically approved what she said in paragraph 58 (and paragraphs 66 and 67). Paragraph 58 forms part of the section of the opinion in which the Advocate General considered whether bad faith depended on subjective intention or purely objective criteria. In paragraph 57 she expressed the view that "in normal usage, the concept of bad faith implies a subjective mental state of a general nature, as outlined in the various descriptions cited by Lindt, Hauswirth and the Commission". The one cited by Hauswirth, which the Advocate General set out in paragraph 52, was the "often-quoted dictum" of Lindsay J in Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd [1999] R.P.C. 367 at 379 that bad faith "includes dishonesty and … also some dealings which fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined". The Advocate General concluded in paragraph 60 that bad faith "relates to a subjective motivation on the part of the trade mark applicant - a dishonest intention or other 'sinister motive' -which will none the less normally be established by reference to objective criteria… it involves conduct which departs from accepted principles of ethical behaviour or honest commercial and business practices, which can be identified by assessing the objective facts of each case against such standards". It is this conclusion which provides the foundation (via Case T-82/14 Copernicus—Trademarks Ltd v EUIPO (T-82/14) EU: T:2016:396 at [28]) for what the General Court said in Hasbro at [41], which constitutes Sir Christopher's point 4.
[18] As for Koton, what the Court of Justice said was as follows:
[3] The concept of bad faith presupposes the existence of a dishonest state of mind or intention, but dishonesty is to be understood in the context of trade mark law, i.e. the course of trade and having regard to the objectives of the law namely the establishment and functioning of the internal market, contributing to the system of undistorted competition in the Union, in which each undertaking must, in order to attract and retain customers by the quality of its goods or services, be able to have registered as trade marks signs which enable the consumer, without any possibility of confusion, to distinguish those goods or services from others which have a different origin: Lindt at [45]; Koton Magazacilik at [45].
[4] The concept of bad faith, so understood, relates to a subjective motivation on the part of the trade mark applicant, namely a dishonest intention or other sinister motives. It involves conduct which departs from accepted standards of ethical behaviour or honest commercial and business practices: Hasbro at [41].
[5] The date for assessment of bad faith is the time of filing the application: Lindt at [35].
[6] It is for the party alleging bad faith to prove it: good faith is presumed until the contrary is proved: Pelikan at [21] and [40].
[7] Where the court or tribunal finds that the objective circumstances of a particular case raise a rebuttable presumption of lack of good faith, it is for the applicant to provide a plausible explanation of the objectives and commercial logic pursued by the application: Hasbro at [42].
[8] Whether the applicant was acting in bad faith must be the subject of an overall assessment, taking into account all the factors relevant to the particular case: Lindt at [37].
[9] For that purpose, it is necessary to examine the applicant's intention at the time the mark was filed, which is a subjective factor which must be determined by reference to the objective circumstances of the particular case: Lindt at [41] - [42].
[10] Even where there exist objective indicia pointing towards bad faith, however, it cannot be excluded that the applicant's objective was in pursuit of a legitimate objective, such as excluding copyists: Lindt at [49].
11. Bad faith can be established even in cases where no third party is specifically targeted, if the applicant's intention was to obtain the mark for purposes other than those falling within the functions of a trade mark: Koton Magazacilik at [46].
12. It is relevant to consider the extent of the reputation enjoyed by the sign at the time when the application was filed: the extent of that reputation may justify the applicant's interest in seeking wider legal protection for its sign: Lindt at [51] to [52].
…'
[17] Point 3 in this list requires clarification. The reference to Lindt at [45] appears to be a mistake since there is no reference to "dishonesty" in that paragraph or anywhere else in the Court of Justice's reasoning from [34] to [53]. Furthermore, the Court largely endorsed the reasoning of Advocate General Sharpston in her opinion, and specifically approved what she said in paragraph 58 (and paragraphs 66 and 67). Paragraph 58 forms part of the section of the opinion in which the Advocate General considered whether bad faith depended on subjective intention or purely objective criteria. In paragraph 57 she expressed the view that "in normal usage, the concept of bad faith implies a subjective mental state of a general nature, as outlined in the various descriptions cited by Lindt, Hauswirth and the Commission". The one cited by Hauswirth, which the Advocate General set out in paragraph 52, was the "often-quoted dictum" of Lindsay J in Gromax Plasticulture Ltd v Don & Low Nonwovens Ltd [1999] R.P.C. 367 at 379 that bad faith "includes dishonesty and … also some dealings which fall short of the standards of acceptable commercial behaviour observed by reasonable and experienced men in the particular area being examined". The Advocate General concluded in paragraph 60 that bad faith "relates to a subjective motivation on the part of the trade mark applicant - a dishonest intention or other 'sinister motive' -which will none the less normally be established by reference to objective criteria… it involves conduct which departs from accepted principles of ethical behaviour or honest commercial and business practices, which can be identified by assessing the objective facts of each case against such standards". It is this conclusion which provides the foundation (via Case T-82/14 Copernicus—Trademarks Ltd v EUIPO (T-82/14) EU: T:2016:396 at [28]) for what the General Court said in Hasbro at [41], which constitutes Sir Christopher's point 4.
[18] As for Koton, what the Court of Justice said was as follows:
'[45] While, in accordance with its usual meaning in everyday language, the concept of 'bad faith' presupposes the presence of a dishonest state of mind or intention, that concept must moreover be understood in the context of trade mark law, which is that of the course of trade. In that regard, Regulations No 40/94, No 207/2009 and No 2017/1001, which were adopted successively, have the same objective, namely the establishment and functioning of the internal market (see, as regards Regulation No 207/2009, judgment of 27 June 2013, Malaysia Dairy Industries (C-320/12) EU:C:2013:435, paragraph 35). The rules on the EU trade mark are aimed, in particular, at contributing to the system of undistorted competition in the Union, in which each undertaking must, in order to attract and retain customers by the quality of its goods or services, be able to have registered as trade marks signs which enable the consumer, without any possibility of confusion, to distinguish those goods or services from others which have a different origin. …
[46] Consequently, the absolute ground for invalidity referred to in Article 52 (1) (b) of Regulation No 207/2009 applies where it is apparent from relevant and consistent indicia that the proprietor of an EU trade mark has filed the application for registration of that mark not with the aim of engaging fairly in competition but with the intention of undermining, in a manner inconsistent with honest practices, the interests of third parties, or with the intention of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark, in particular the essential function of indicating origin recalled in the previous paragraph of this judgment.'
[19] Although the Court of Justice does not say so in terms in this passage, it is clear from the Court's reasoning that bad faith is not limited to dishonesty. This is consistent with the analysis of the Advocate General in Lindt and with the judgments of the General Court in Copernicus and Hasbro .
[20]. Sir Christopher's point 11 is drawn from what the Court of Justice said in Koton at [46]. The Court repeated this in Sky CJEU at [75]. The Court went on in Sky CJEU to hold at [81], and to rule in the dispositif at [2], that:
"Article 51(1)(b) of Regulation No 40/94 … and Article 3(2)(d) of First Directive 89/104 must be interpreted as meaning that a trade mark application made without any intention to use the trade mark in relation to the goods and services covered by the registration constitutes bad faith, within the meaning of those provisions, if the applicant for registration of that mark had the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark."
[21] This confirms that the purpose of this ground of invalidity is twofold: first to prevent bad faith vis-à-vis specific third parties, and secondly to prevent abuse of the trade mark registration system (see also Hasbro at [69]-[72]). As the European trade mark system has evolved over the past three decades, abuses of the system have become more prevalent. The bad faith objection provides one of the few ways of combatting such abuses, and therefore it is important that it is not too restrictively interpreted.
[22] A vexed question in this field is whether it is sufficient to establish bad faith to prove that the applicant for registration did not intend to use the trade mark in question in relation to the goods or services specified in the application. Having repeated what it had said in Koton, the CJEU answered this question in Sky CJEU as follows (internal citation omitted):
'[76] Admittedly, the applicant for a trade mark is not required to indicate or even to know precisely, on the date on which his or her application for registration of a mark is filed or of the examination of that application, the use he or she will make of the mark applied for and he or she has a period of 5 years for beginning actual use consistent with the essential function of that trade mark …
[77] However, as the Advocate General observed in point 109 of his Opinion, the registration of a trade mark by an applicant without any intention to use it in relation to the goods and services covered by that registration may constitute bad faith, where there is no rationale for the application for registration in the light of the aims referred to in Regulation No 40/94 and First Directive 89/104. Such bad faith may, however, be established only if there is objective, relevant and consistent indicia tending to show that, when the application for a trade mark was filed, the trade mark applicant had the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark.'
[77] However, as the Advocate General observed in point 109 of his Opinion, the registration of a trade mark by an applicant without any intention to use it in relation to the goods and services covered by that registration may constitute bad faith, where there is no rationale for the application for registration in the light of the aims referred to in Regulation No 40/94 and First Directive 89/104. Such bad faith may, however, be established only if there is objective, relevant and consistent indicia tending to show that, when the application for a trade mark was filed, the trade mark applicant had the intention either of undermining, in a manner inconsistent with honest practices, the interests of third parties, or of obtaining, without even targeting a specific third party, an exclusive right for purposes other than those falling within the functions of a trade mark.'
[23] The principles of European law identified by Sir Christopher in his points 6 and 7 are consistent with earlier domestic jurisprudence. So far as point 6 is concerned, the following statement of principle in Walton International Ltd v Verweij Fashion BV [2018] EWHC 1608 (Ch); [2018] RPC 19 at [186(i)] is of particular relevance to the present case:
'A person is presumed to have acted in good faith unless the contrary is proved. An allegation of bad faith is a serious allegation which must be distinctly [pleaded and] proved. The standard of proof is the balance of probabilities, but cogent evidence is required due to the seriousness of the allegation. It is not enough to prove facts which are also consistent with good faith.'
The words in square brackets I have added to the quotation are supported by earlier authority: see e.g. ROYAL ENFIELD Trade Mark [2002] R.P.C. 24 at [31].
[24] As for point 7, it is worth setting out what the General Court said in Hasbro more fully (internal citations omitted):
'[42] It is for the applicant for a declaration of invalidity who intends to rely on Article 52(1)(b) of Regulation No 207/2009 to prove the circumstances which make it possible to conclude that an application for registration of an EU trade mark was filed in bad faith, the good faith of the trade mark applicant being presumed until proven otherwise ….
[43] Where EUIPO finds that the objective circumstances of the particular case which were relied on by the applicant for a declaration of invalidity may lead to the rebuttal of the presumption of good faith which the proprietor of the mark at issue enjoys when he or she files the application for registration of that mark, it is for the proprietor of that mark to provide plausible explanations regarding the objectives and commercial logic pursued by the application for registration of that mark.
[44] The proprietor of the trade mark at issue is best placed to provide EUIPO with information regarding his or her intentions at the time of applying for registration of that mark and to provide it with evidence capable of convincing it that, in spite of the existence of objective circumstances, those intentions were legitimate ….'"
[43] Where EUIPO finds that the objective circumstances of the particular case which were relied on by the applicant for a declaration of invalidity may lead to the rebuttal of the presumption of good faith which the proprietor of the mark at issue enjoys when he or she files the application for registration of that mark, it is for the proprietor of that mark to provide plausible explanations regarding the objectives and commercial logic pursued by the application for registration of that mark.
[44] The proprietor of the trade mark at issue is best placed to provide EUIPO with information regarding his or her intentions at the time of applying for registration of that mark and to provide it with evidence capable of convincing it that, in spite of the existence of objective circumstances, those intentions were legitimate ….'"
The judge summarized Tesco's argument on bad faith as follows at para [241] of her judgment:
"i) first, that the Wordless Mark was designed as a legal weapon (which is said to be an obvious inference from the fact that Lidl applied for the Wordless Marks in circumstances where it already had the Mark with Text with the same specification of goods/services and its intention was not to use the Wordless Mark independently of the Mark with Text); and
ii) second, the "evergreening" of the Wordless Mark, i.e. the periodic re-registration of the Wordless Mark which involved applying for goods/services already covered by the prior Wordless Marks (from which it is inferred that Lidl wishes to avoid sanctions for five years' non-use)."
It was Tesco's case that Lidl had to prove its subjective intentions at the relevant filing dates of the various wordless marks. If it could not do so, then a finding of bad faith must inexorably follow because such conduct would be an abuse of the trade mark registration system. It was common ground that bad faith fell to be assessed at the date of filing of the application in issue which in this case was 1995, 2002, 2005, 2007 and 2021, Lidl was unable to provide any evidence to displace the prima facie inference that, at the time of the 1995 application, the wordless mark was registered in order to use it as a weapon to secure a wider legal monopoly than the claimant was entitled to, and that it had no genuine intention to use the mark. The judge also found that the 2002, 2005 and 2007 registrations were designed in part to evergreen in order to avoid sanctions for non-use which was an abuse of the trade mark system and in part to further the policy of registration of the wordless mark as a legal weapon. She concluded that that had been in bad faith and that the registrations were invalid.
"i) first, that the Wordless Mark was designed as a legal weapon (which is said to be an obvious inference from the fact that Lidl applied for the Wordless Marks in circumstances where it already had the Mark with Text with the same specification of goods/services and its intention was not to use the Wordless Mark independently of the Mark with Text); and
ii) second, the "evergreening" of the Wordless Mark, i.e. the periodic re-registration of the Wordless Mark which involved applying for goods/services already covered by the prior Wordless Marks (from which it is inferred that Lidl wishes to avoid sanctions for five years' non-use)."
It was Tesco's case that Lidl had to prove its subjective intentions at the relevant filing dates of the various wordless marks. If it could not do so, then a finding of bad faith must inexorably follow because such conduct would be an abuse of the trade mark registration system. It was common ground that bad faith fell to be assessed at the date of filing of the application in issue which in this case was 1995, 2002, 2005, 2007 and 2021, Lidl was unable to provide any evidence to displace the prima facie inference that, at the time of the 1995 application, the wordless mark was registered in order to use it as a weapon to secure a wider legal monopoly than the claimant was entitled to, and that it had no genuine intention to use the mark. The judge also found that the 2002, 2005 and 2007 registrations were designed in part to evergreen in order to avoid sanctions for non-use which was an abuse of the trade mark system and in part to further the policy of registration of the wordless mark as a legal weapon. She concluded that that had been in bad faith and that the registrations were invalid.
Comment
This was a very closely reasoned and meticulously documented judgment. It analyses exhaustively the relevant case law on every issue.
Further Information
Anyone wishing to discuss this article may call me on +44 (0)20 7404 5252 during office hours or send me a message on my contact form.
Comments