Trade Marks

Posted on 22 February 2019

Trade Marks

Validity

In recent years, we have seen a particular focus in the Courts on questions over registrability of non-traditional trade marks, and the same was true in 2018, with further developments in the KitKat shape case, the Cadbury’s colour purple dispute, and the Louboutin red sole.

Alongside these case law developments, it has now been just over a year since revisions to EU trade mark law and practice made it easier to register non-traditional marks, namely the removal of the requirement that marks should be ‘capable of graphical representation’. This change has also now been introduced for UK trade marks (from 14 January 2019).

Whilst, in practice, there have not been a significant number of applications for such marks, given that they are not the norm, it does open up a number of exciting opportunities for brand owners. 

The other key development in relation to validity in recent months has been the focus on trade mark specifications, with a number of decisions considering questions of clarity and precision of certain commonly used terms, and broadly drafted specifications. These cases could have an impact on the scope of protection of marks in the future.

CJEU decides on KitKat shape case, but questions remain

The long-running saga of Nestlé’s attempts to register the shape of its KitKat bar reached the European Court of Justice (CJEU) in 2018. Whilst the (considerable) press coverage of the CJEU’s decision suggested Nestlé had lost, in fact, the CJEU sent the case back to the European Intellectual Property Office (EUIPO) to reconsider the evidence. 

The key issue before the CJEU was whether the shape of the KitKat had acquired distinctive character through the use that has been made of it in the EU. In particular, did Nestlé have to demonstrate use in each individual Member State, or only in a substantial part of the EU? 

The CJEU confirmed that evidence of acquired distinctiveness cannot only be in respect of a substantial part of the EU. However, it will not always be necessary to submit evidence of acquired distinctiveness in each Member State; evidence may be relevant to several Member States (or even the whole EU). 

Brand owners preparing evidence of distinctiveness throughout the EU need to consider every Member State but may be able to provide a clear rationale as to why evidence submitted for one Member State may apply to another. The EUIPO’s decision will be hotly anticipated. 

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Court of Appeal decides Cadbury’s purple mark not a series

In December 2018, the Court of Appeal upheld a decision that a trade mark registered by Cadbury for the colour purple for packaging was not a series mark. Cadbury had applied to register its well-known purple colour mark for chocolate bars but, following guidance from the UKIPO, had included the following description: “The mark consists of the colour purple (Pantone 2685C) as shown on the form of application, applied to the whole visible surface, or being the predominant colour applied to the whole visible surface, of the packaging of the goods”. In separate proceedings which also went to the Court of Appeal, the ‘predominant colour’ wording was objected to, as opening the door to a multiplicity of signs which were neither graphically represented, nor described with any certainty or precision. Cadbury therefore sought to delete that part of the description in this mark, on the basis that the registration was a ‘series’ and the offending wording could be deleted as a deletion of certain marks in the series.

The Court of Appeal concluded that Cadbury’s registration should be understood as a registration of a single mark with an imprecise (and unacceptable) description, not as a registration of two or more marks forming a series. Whilst this was (regrettably) due to the UKIPO’s guidance, it would be a far reaching step to allow a lack of clarity to be read as an attempt to register a number of marks (which would allow the offending wording to be deleted). Accordingly, the mark was invalid. 

Louboutin’s red sole – not a shape mark 

In a further important decision relating to non-traditional marks, the CJEU ruled in Louboutin’s favour in deciding that its red sole was not a shape mark, and was therefore not subject to the objections that may apply in relation to such marks. It was instead a position mark for a colour applied to the sole of a shoe. 

The description of Louboutin’s mark in the registration explicitly states that the contour of the shoe is not part of the trade mark, but is intended to show the positioning of the red colour covered by the registration. The CJEU decided that, whilst the shape of the product plays a role in creating an outline for the colour, a sign will not consist of that shape where the registration did not seek to protect that shape, and sought solely to protect the application of a colour to a specific part of that product.

The CJEU also decided that Louboutin’s mark cannot be regarded as consisting ‘exclusively’ of a shape, as the main element is a specific colour designated by an internationally recognised identification code. The case went back to The Hague District Court in the Netherlands as the referring court to apply the CJEU’s judgment and determine issues of trade mark validity and infringement.

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Kenzo Estate: A lesson for brand owners 

Operating a business under the business owner’s name is a common practice, but it can create issues from a branding perspective. A CJEU decision in a long-running dispute demonstrates the challenges that individuals may face when applying to register their name as a trade mark. Mr Kenzo Tsujimoto, owner of the Kenzo Estate winery in Napa Valley, applied to register international trade marks designating the EU for KENZO ESTATE in relation to various beverages, foods and services associated with wine tasting.

Fashion brand Kenzo opposed the applications relying on its earlier registration for KENZO. The CJEU agreed that the applications for KENZO ESTATE would unfairly exploit the reputation of Kenzo’s mark. In particular, there was no unconditional right to register a name or a forename as an EU trade mark, and the fact that “Kenzo” was Mr Tsujimoto’s forename did not amount to due cause (and was indeed irrelevant).

Interestingly, the CJEU upheld a distinction between the goods and services in the application, finding that the opposition failed for certain of the goods in the trade mark application, such as olive oil and confectionary (as opposed to wine for example), as these were not ‘luxury goods’ in the same way as Kenzo’s goods, but were mass-consumed foodstuffs bought in any local shop.

Trade mark specifications under the spotlight 

A number of questions have been referred to the CJEU in Sky v SkyKick which will have potentially wide-ranging implications for those filing and enforcing trade marks, including whether:

  • certain broad terms commonly used in trade mark specifications such as e.g., ‘computer software’ are invalid on the ground they lack clarity and precision;
  • there should be a finding of bad faith when an application is made covering a wide list of goods and services where there is a finding of no intention to use the mark for certain goods and services;
  • a mark found invalid on the ground there was no intention to use for all the goods and services should be struck down in its entirety, or only for the affected goods/services. 

The CJEU has not yet set the date for the hearing of the reference.

In a subsequent decision (Fidelity v Fidelis), Arnold J considered a specification covering ‘financial services’. Whilst he decided that FIDELIS did not infringe the FIDELITY marks, largely due to the high degree of knowledge and attention of the average consumer of such services, he made a number of determinations in relation to the FIDELITY marks. In particular, he said it was arguable that the FIDELITY mark was invalid insofar as it was registered for ‘financial services’ on the basis it was potentially a term lacking in clarity and precision (an issue which would depend upon the outcome in SkyKick). 

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In a recent decision of the High Court (Pathway v Easygroup) the Court considered (obiter) that it may be appropriate to use class numbers in the Nice Classification as an aid to interpretation of a specification where the words used in the specification lack clarity and precision. This will apply in the context of both infringement and revocation actions, as well as to applications. Where, however, the scope of the specification is clear from the ordinary and natural meaning of the words chosen, the class number is merely confirmatory and does not change the meaning of the terms used. On the case before the Court, the phrase ‘provision of office facilities’ was sufficiently clear and precise, and so its ordinary and natural meaning could be ascertained without reference to the class number. 

Infringement and passing off

Cases raising novel or significant legal issues concerning infringement were thin on the ground in 2018, although there were a number of interesting cases worthy of mention.

These range from the decision of the Intellectual Property Enterprise Court (IPEC) that there was no passing off through the use of the trading name PRICK in a dispute between a tattoo artist and a cacti retailer, to the referral of a number of questions to the CJEU relating to jurisdiction in cases of online infringement.

This latter issue arose in a dispute between AMS Neve, an English company making and selling audio equipment, and Heritage, a Spanish company selling and supplying audio equipment in Spain and on its website. In the IPEC, the result was that the UK court could hear AMS Neve’s claim for infringement of its UK trade mark and for passing off, but not for infringement of its EU trade mark (this had to be brought in Spain). This outcome presents significant ‘procedural inefficiency’ and a risk of irreconcilable decisions. The Court of Appeal decided to refer questions to the CJEU, expressing doubts as to the correctness of the IPEC approach, but recognising that recent CJEU case law does provide support for it. The case was heard by the CJEU on 17 January 2019. 

LNDR beats LDNR

In the Summer of 2018, the IPEC decided in favour of premium sportswear brand LNDR in an infringement action following Nike’s viral launch of its LDNR ‘Nothing Beats a Londoner’ campaign. LNDR successfully obtained an interim injunction against Nike following the launch of the campaign, but the Court decided Nike did not have to remove all past references to LDNR from social media.

Seeking an interim injunction was a brave step as LNDR had to give Nike a cross-undertaking in damages, which could have seen it having to pay Nike significant damages if it had then lost at trial. However, just five months after the claim began, the IPEC decided in its favour, and granted a final injunction. The Court had no difficulty in concluding that there was confusing similarity between LNDR and LDNR, and accepting that the average consumer might think there was some sort of tie-up between the two brands. Nike’s descriptiveness attacks on the validity of the mark (as an abbreviation meaning ‘Londoner’) also failed – on the evidence, the average consumer would not perceive LNDR as meaning ‘Londoner’ in the context of clothing. 

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ARGOS: an update on ‘targeting’ by websites

In an interesting dispute, but one concerning unusual facts, the Court of Appeal considered questions relating to targeting consumers in the context of online use, and unfair advantage. UK retailer Argos brought infringement proceedings against Argos Systems, a Delaware company which had registered argos.com in 1992. Some 89% of the traffic to the argos.com website was from the UK and, for a period, Argos Systems generated significant advertising revenue, through the display of adverts on its webpage via the Google AdSense program which were of interest to UK consumers. 

Whilst the High Court judge decided that the average consumer would not have regarded the US site, or any part of it, as aimed or directed at them, the Court of Appeal said that the relevant enquiry on targeting was whether Argos Systems was providing an ‘electronic billboard’ service under the sign, in the course of trade, intended for the average consumer in the UK. It concluded that Argos Systems was targeting UK consumers through its electronic billboards – the average consumer who looked at the contents of the billboards when they included adverts of interest to them would conclude that someone was targeting the billboard service at them. 

However, there was no infringement as the trial judge had made no error of principle in concluding that Argos Systems had not taken unfair advantage of the ARGOS mark. The Court recognised that many internet users were brought to Argos Systems’ site by mistake. Argos Systems had not done anything to seek this unwanted traffic and, although it benefitted from the traffic as a result of its AdSense membership (a commercially common activity), this was not enough to constitute unfair advantage. 

Supreme Court decides brand owners should pay implementation costs of website blocking orders 

Website blocking orders are a significant weapon for rights owners in the fight against online infringement, including sales of counterfeit products. Until the Supreme Court’s decision in Cartier v BT in June 2018, ISPs were required to bear the costs of implementing these orders. Now, however, brand owners will have to indemnify ISPs for their reasonable implementation costs, which may impact on the attractiveness of website blocking orders in some cases (albeit the indemnity may not be available for intermediaries carrying out hosting or caching activities, as opposed to being a mere conduit, as those activities could involve a greater degree of participation in the infringement). For rights owners, covering the ISP’s costs of implementing a website blocking order should now be seen as the ‘cost of doing business’ in relation to protecting their rights online.

The Supreme Court concluded that the ISPs were innocent intermediaries – they were ‘mere conduits’, with no means of knowing what use was being made of their network by third parties to distribute illegal content. They had no legal responsibility for the infringement, and, in blocking their customers’ access to the infringing websites, were simply acting in accordance with a court order. 

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GDPR and WHOIS

With GDPR coming into force across the EU on 25 May 2018, brand owners have had to come to terms with a WHOIS database which no longer discloses a registrant’s details in all cases. In a last minute attempt to prevent WHOIS ‘going dark’, ICANN issued a Temporary Specification for gTLD registration data governing how registries and registrars that are established in the EEA or offer their registration services to EEA registrants should deal with registrant data (the Temporary Specification must be reaffirmed every 90 days, and can only be done so until May 2019). 

In practice, whether a rights owner can obtain ‘reasonable’ access to registration data depends upon how the individual registry/registrar interprets the rights owner’s request and its reliance on the requisite legitimate interest. It also depends on whether they apply the Temporary Specification on a global basis and whether they differentiate between natural and legal persons.

As for Nominet and ‘.uk’ domain names, rights owners are able to request access to all registry data, including contact data, via Nominet’s data disclosure policy. 

ICANN continues to consider how to reconcile GDPR and an effective WHOIS. The topic promises to be one that is hotly contested for some time yet, with EU data protection authorities, the European Data Protection Board and the EU Commission all keeping a watchful eye on the progress that ICANN, as the ‘guardian’ of the domain name system, is able to make.

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Parallel imports: CJEU issues decisions on relabelling and de-branding

The CJEU issued two significant decisions on parallel imports in 2018. 

The first decision concerned the import of a wound dressing from Austria into Germany. The CJEU confirmed that the principles previously set out in relation to pharmaceutical products apply equally to repackaged or relabelled medical devices. However, the relabelling in question did not amount to objectionable repackaging. The parallel importer had simply added a small label to an unprinted part of the outside of the packaging of the device which did not conceal the trade mark, and which only identified the importer of the medical device and nothing more. Accordingly, the parallel importer was not required to give notice or a sample to the trade mark owner.

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In the second decision, the CJEU decided that Mitsubishi could prevent the removal of its trade mark (de-branding) from parallel imported trucks and subsequent re-branding. The Court decided that removing the signs, albeit without any use of the mark at all, deprived the trade mark owner of the benefit of the essential right to control the first marketing in the EEA of goods under the mark and undermined the functions of the trade mark relating to indication of origin, investment and advertising.  Accordingly, it amounted to infringement, a decision that has been criticised. 

New laws

Following similar changes to the EU trade mark regime, a number of opportunities opened up to owners of UK trade marks in January 2019 for broader protection and more robust enforcement of their brands. 

Highlights in the package of reforms implementing the Trade Marks Directive include:

  • Opportunities to obtain registration for a wider range of non-traditional marks, through removal of the requirement that a mark must be capable of being graphically represented. 
  • Increased powers against counterfeiters. For example, it is now possible to take action against those who have taken preparatory steps to counterfeit goods (or services) by applying a registered trade mark to labels, packaging, tags or security features. It will also be possible for Customs authorities to detain counterfeit ‘goods in transit’ passing through the UK. 
  • The ‘own name’ defence is now only available for individuals. As there are no transitional provisions, it is possible that an existing company or trading name may be challenged through trade mark infringement proceedings. 
  • Streamlined proceedings: for example, where a trade mark owner considers its mark is infringed by a later registered mark, it will no longer be necessary to bring separate invalidity proceedings against that mark. Similarly, defendants in infringement proceedings can raise non-use arguments against a claimant’s trade mark, rather than having to commence parallel revocation proceedings.

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