Infringement - Unauthorised use of registered trademark

Samuel Smith Old Brewery v Philip Lee (trading as Cropton Brewery): Chancery Division (Mr Justice Arnold): 22 July 2011

Article 5 of Council Directive (EC) 2008/95, so far as material, provides: '1. The registered trademark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade: ... (b) any sign where ... there exists a likelihood of confusion on the part of the public, which includes the likelihood of association between the sign and the trademark.'

Article 6 of Council Directive (EC) 2008/95, so far as material, provides: 'The trademark shall not entitle the proprietor to prohibit a third party from using in the course of trade: … (b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services; ... provided he uses them in accordance with honest practices in industrial or commercial matters.'

Section 21 of the Trade Marks Act 1994 Act, so far as material provides: '(1) Where a person threatens another with proceedings for infringement of a registered trademark ... any person aggrieved may bring proceedings for relief under this section. (2) The relief which may be applied for is any of the following - (a) a declaration that the threats are unjustifiable ... and the plaintiff is entitled to such relief unless the defendant shows that the acts in respect of which proceedings were threatened constitute (or if done would constitute) an infringement of the registered trademark concerned.'

The claimant brewery, Samuel Smith, (SS) was one of the oldest established and still trading breweries in the United Kingdom. A stylised white rose device (the trademark) was registered as a trademark being both distinctive of the brewery and a reminder to customers of SS's strong connection with Yorkshire. SS applied to register the trademark in 1973. Cropton Brewery (CB), founded in 1984 in Yorkshire, agreed to supply Yorkshire Bitter to Marks & Spencer (M&S). The label for the beer was designed by or on behalf of M&S.

The front of the label bore the words 'Yorkshire Bitter' printed on white on a red roundel which surrounded a slightly stylised white rose emblem with red accents. When Yorkshire Bitter came to the attention of SS it sent, on 10 December 2007, a letter before action to M&S alleging infringement of the trademark and passing off. The letter was not copied to CB, nor did M&S inform CB about the complaint at that time.

In June 2009, SS brought a claim against CB alleging infringement and passing off in respect of Yorkshire Warrior, another beer produced by CB. From 9 September 2009, an informal licence granted by the Ministry of Defence for use of the Yorkshire white rose had been withdrawn in respect of Yorkshire Warrior in order to respect SS trademark rights. It was only when SS solicitor's sent CB's solicitors photographs of the products complained of on 14 September 2009, that it was made clear that the claim related to both products, namely Yorkshire Warrior and Yorkshire Bitter.

On 30 October 2009, CB served a defence and counterclaim alleging that the letter of 10 December 2007 (the first letter) had been an unjustified threat of trade mark infringement proceedings contrary to s 21 of the Trade Marks Act 1994 (the Act). The defence to counterclaim admitted the letter but denied that it was an actionable threat as CB was not a person aggrieved under s21 of the Act. A further letter was sent from SS solicitor's on 7 July 2010 (the second letter)(see [157] of the judgment). Following failure to settle the matter came before the courts.

Consideration was given to arts 5 and 6 of Council Directive (EC) 2008/95 (the Directive). Those provisions were implemented in the UK by s10(2),(3) and 11(2)(b) of the Act. Corresponding provisions were contained in arts 9(1)(b),(c) and 12(b) of Council Regulation (EC) 207/2009 (the Regulation). The issues were, inter alia: (i) whether CB had infringed the trade mark by use of the Yorkshire Bitter label; (ii) whether CB had infringed the trademark pursuant to art 5(1)(b) of the Directive by use of the Yorkshire Warrior label; (ii) whether CB had a defence in respect of its infringement of the trademark by use of the Yorkshire Warrior label under art 6(1)(b) of the Directive in respect of the period to the end of October 2009; (iii) whether the first and second letters had been unjustified threats of trademark infringement proceedings under s 21 of the Act and whether it was an actionable threat.

The court ruled: (1) It was established that the likelihood of confusion had to be appreciated globally through the eyes of the average consumer of the goods or services in question. The average consumer normally perceived a mark as a whole and did not proceed to analyse its various details.

The 'visual' aural and conceptual similarities of the marks had normally to be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it was only when all other components of a complex mark were negligible that it was permissible to make the comparison solely on the basis of the dominant elements. Nevertheless, the overall impression conveyed to the public by a composite trademark might in certain circumstances, be dominated by one or more of its components and it was quite possible that in a particular case an element corresponding to an earlier trademark might retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark.

A lesser degree of similarity between the goods or services might be offset by a great degree of similarity between the marks, and vice versa. There was a greater likelihood of confusion where the earlier mark had a highly distinctive character, either per se or because of the use that had been made of it. Mere association was not sufficient. If the association between the marks caused the public to wrongly believe that the respective goods [or services] had come from the same or economically-linked undertakings, there was a likelihood of confusion (see [77] of the judgment).

There was an important difference between the comparison of marks in the registration context and the comparison of mark and sign in the infringement context, namely that the former required consideration of notional fair use of the mark applied for, while the latter required consideration of the use that had actually been made of the sign in context (see [78] of the judgment).

In the instant case, so far as Yorkshire Bitter was concerned, the identity of the goods and the distinctive character of the trademark favoured a likelihood of confusion, but the differences between the white rose device and the trademark, the remainder of the sign and the identification of CB as the producer on the front of the label all militated against it. SS's dilatoriness in pursuing M&S and CB over the matter suggested that it had not considered that there had been a real likelihood of confusion.

Yorkshire Bitter had only been included in the case because Samuel Smith had thought it would look odd to pursue Yorkshire Warrior without pursuing Yorkshire Bitter. The evidence of experience strongly suggested that there had been no likelihood of confusion. Overall, SS had had not established that there had been a likelihood of confusion.

In regard to Yorkshire Warrior, the identity of the goods and the distinctive character of the trademark again favoured a likelihood of confusion. The white rose device was more similar to the trademark, and it was more a dominant element of the sign, than in the case of Yorkshire Bitter. Although there had been no evidence of actual confusion in practice, it was more difficult to place confidence in that as showing there was no likelihood of confusion than in the case of Yorkshire Bitter.

Although the majority of consumers would not be confused. Overall, there was a 'likelihood' that some consumers would be confused into believing either that Yorkshire Warrior was a SS product or that it had some other connection with SS (see [105], [106] of the judgment).

Sabel BV v Puma AG and Rudolf Dassler Sport: C-251/95 [1997] All ER (D) 69 considered; Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc (formerly Pathe Communications Corp): C-39/97 [1998] All ER (EC) 934 considered; Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV: C-342/97 [1999] All ER (D) 652 considered; Medion AG v Hauptzollamt Duisburg: C-208/06; Canon Deutschland GmbH v Hauptzollamt Krefeld: C-209/06 [2007] All ER (D) 164 (Sep) considered; Adidas AG v Marca Mode CV: C-102/07 [2008] All ER (D) 147 (Apr) considered; Shaker di L Laudato & C Sas v Office for Harmonisation in the Internal Market (Trade Marks and Designs) (OHIM): T-7/04 [2008] All ER (D) 144 (Nov) considered.

(2) In relation to art 6(1)(b) of the Directive; first, the requirement to act in accordance with honest practices in industrial or commercial matters 'constitutes in substance the expression of a duty to act fairly in relation to the legitimate interests of the trademark proprietor'.

Secondly, the court should 'carry out an overall assessment of all the relevant circumstances', and in particular should assess whether the defendant 'can be regarded as unfairly competing with the proprietor of the trademark'. Thirdly, an important factor was whether the use of the sign complained of either gave rise to consumer deception or took unfair advantage of, or was detrimental to, the distinctive character or repute of the trademark. If it did, it was unlikely to qualify as being in accordance with honest practices.

Fourthly, a mere likelihood of confusion would not disqualify the use from being in accordance with honest practices if there was a good reason why such a likelihood of confusion should be tolerated. In applying these principles the following factors were material: (i) whether the defendant knew or reasonably ought to have known of the existence of the trademark; (ii) whether the defendant had used the sign complained of in reliance on competent legal advice based on proper instructions; (iii) the nature of the use complained of, and the extent to which it was used as a trademark for the defendant's goods or services; (iv) whether the defendant had known or ought to have known that the trademark owner had objected to the use of the sign complained of have at least appreciated that there was a likelihood that the owner would object; (v) whether the defendant had known, or should have know, that there had been a likelihood of confusion; (vi) whether there had been actual confusion, and if so whether the defendant had known that; (vii) whether the trademark had a reputation, and if so whether the defendant had known or at least should have appreciated that and whether the defendant knew, or ought to have known, that the reputation of the trademark would be adversely affected; (viii) whether the defendant's use of the sign complained of interfered with the owner's ability to exploit the trademark; (ix) whether the defendant had a sufficient justification for using the sign complained of; and (x) the timing of the complaint from the trademark owner (see [118] of the judgment).

The instant was the first occasion in which the court had to consider the issue of use in accordance with honest practices in industrial or commercial matters in relation to art 6(1)(b) of the Directive. That made little difference to the principles to be applied (see [113] of the judgment).

In the instant case, the two different uses complained of raised quite different considerations so far as honest practices were concerned. On the facts, in relation to Yorkshire Bitter, CB's use of the white rose element of the sign had been in accordance with honest practices in industrial and commercial matters. In relation to Yorkshire Warrior; CB's use of the white rose element of the sign had been in accordance with honest practices until the end of October 2009, but had not subsequently (see [122], [130] of the judgment). CB had a defence (see [163], of the judgment).

Och-Ziff Management Europe Ltd v Och Capital LLP [2010] All ER (D) 07 (Nov) applied; Datacard Corporation v Eagle Technologies Ltd [2011] All ER (D) 199 (Feb) applied; Gerolsteiner Brunnen GmbH & Co v Putsch GmbH: C-100/02 [2004] All ER (D) 21 (Jan) applied; Bayerische Motorenwerke AG (BMW) v Deenik: C-63/97 [1999] All ER (EC) 235 applied; Gillette Co v LA-Laboratories Ltd Oy: C-228/03 [2005] All ER (D) 305 (Mar) applied; Celine Sarl v Celine SA: C-17/06 [2007] All ER (D) 55 (Sep) applied; Anheuser-Busch Inc v Budejovicky Budvar Narodni Podnik [2009] All ER (D) 196 (Oct) applied.

(3) The ambit of the word aggrieved in s 21 of the Act was a question of law, but whether or not a person was aggrieved by a threat was a question of fact. The requirement to show that 'the threats have or are likely to cause him damage which is not minimal' did not mean that the claimant had to prove loss of identifiable contracts. It was sufficient to show that 'his commercial interests are or are likely to be adversely affected in a real as opposed to a fanciful or minimal way' (see [154], [155] of the judgment).

The first letter was a threat of infringement proceedings made to an important commercial customer of CB and normally the court would have no hesitation in concluding that the supplier had been a 'person aggrieved' by such a threat to its customer.

However, in the unusual circumstances, where the allegedly infringing label had been designed by M&S, not CB, and there had been no evidence that the threat had adversely affected CB's commercial relationship with M&S, CB had not established that it had been 'a person aggrieved' by the threat in relation to the first letter (see [156] of the judgment). The counterclaim would be dismissed (see [162] of the judgment).

Reymes-Cole v Elite Hosiery Co Ltd [1965] RPC 102 applied; Brain v Ingledew Brown Bennison and Garrett (a firm) (No 3) [1997] FSR 511 applied.

(4) The meaning of the word 'threat' covered any intimation that would convey to a reasonable man that some person had trademark rights and intended to enforce them against another. It did not matter that the threat might be veiled or covert, conditional or future. Nor did it matter that the threat had been made in response to an enquiry from the party threatened.

The conclusion as to whether a document amounted to a threat of patent proceedings was essentially one of fact. It was a jury-type decision to be decided against the appropriate matrix of fact. Thus a letter or a statement might on its face seem innocuous, but when placed in context it could be a threat of proceedings. The test was whether the communication would be understood by the ordinary recipient in the position of the claimant as constituting a threat of proceedings for infringement. It was immaterial that the threat was contingent (see [159] of the judgment).

In the instant case, read against the relevant background, the letter of 7 July 2010 had not constituted or contained a threat of proceedings for infringement of a registered trademark by Samuel Smith (see [160] of the judgment). L'Oreal (UK) Ltd v Johnson & Johnson [2000] All ER (D) 290 applied.

Denise McFarland and Jeremy Heald (instructed by Travers Smith LLP) for the Samuel Smith. Mark Engelman (instructed by Walker Morris) for CB.