A Spoonful of IP (January 2017)

erbsen

January 2017 issue

In this issue:

* Google AdWords – when does bidding on a competitor’s name infringe their trade marks?
* Trade Mark Licences – formal contractual terms recommended
* Protecting distinctive products – the limits of passing off law
* Iceland v Iceland – The battle over a country name
* “Should’ve” registered that one

Google AdWords – when does bidding on a competitor’s name infringe their trade marks?

The High Court has given its judgment in a trade mark infringement claim between two very similarly-named companies. Unusually, the claim did not concern the Defendant’s name (Victorian Plumbing) per se, because it was accepted that both parties began to trade under their names at around the same time, and that each party was making honest concurrent use of its name. Instead, the claim was in respect of the defendant bidding, on Google AdWords, for the claimant’s name (Victoria Plumb), with the result that an advertisement for the Defendant’s website at www.victoriaplumbing.com, was presented in response to a Google search for “Victoria Plumb”.

The courts have established that bidding on a competitor’s name which is a registered trade mark is permissible, provided that “the advertisement enables average internet users to ascertain whether the goods or services originate from the trade mark proprietor or an unconnected third party”. Bidders must therefore make sure that their advertisement doesn’t cause the public to be confused into thinking that the advertisement is for their competitor’s products.

That is not normally an onerous requirement, and there have been few successful trade mark infringement actions in respect of Google AdWords. In the leading UK case, Interflora was successful in prohibiting Marks & Spencer from bidding on the name “Interflora”. The facts of that case were unusual, however, as the Interflora business is a network of independent members, and various supermarkets including Sainsbury’s, Tesco and Co-Op are or have been members. On those specific facts, the court held that members of the public might, on seeing an advertisement for Marks & Spencer in response to a Google search for “Interflora”, be confused into believing that Marks & Spencer is a member of Interflora. Interflora’s claim probably wouldn’t have succeeded, however, had it been a unified business or franchise rather than a network of independent members.

Although Victoria Plumb’s claim for trade mark infringement was successful in this instance, we do not consider that it establishes any new restrictions on bidding for registered trade marks in Google Adwords. It is clear that the claim succeeded primarily because of the very close degree of similarity between the two companies’ names, which the court considered would lead to public confusion. In our experience, instances of honest concurrent use of virtually identical names are rare, and it would be far more common for a claimant to bring a claim for trade mark infringement to stop a defendant using the similar name as a trading name, rather than only seeking to restrict its use as an AdWord.

The decision should therefore be seen as another “unusual” exception to the general rule that bidding on a competitor’s name is lawful. The case does demonstrate, though, that the closer the similarity between the business names, the more care the AdWord bidder will have to take to distinguish its advertisement from the trade mark owner’s business

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Trade Mark Licences – formal contractual terms recommended

The owner of the Veuve Clicquot champagne brand has recently been successful in the Intellectual Property Enterprise Court following a dispute with an ex-licensee, Polistas. In 2007, Polistas agreed to make polo shirts for Veuve Clicquot staff to promote its sponsorship of the British Open Polo Championship. In return, Polistas was permitted to promote and sell those polo shirts to the public. This arrangement was renewed each year until 2011, when Veuve Clicquot decided not to renew it. Despite that, Polistas continued to promote and sell the products. Veuve Clicquot complained, demanding an end to the infringement and more than 4 years later the dispute came to court.

Whilst the decision raises no new points of law, it serves as a useful reminder of a number of important practice points:

• For brand owners and licensees alike, the case is a clear example of the value of putting formal licence agreements in place. Such agreements provide certainty to each side, so each party knows where they stand. For example, whilst the judge was able to determine what “during the VCC” (the polo championship) meant from the factual background, if this term had been properly defined, the need for litigation could potentially have been avoided.

• Brand owners should ensure that they put in place adequate policing measures to ensure that the licensee’s use of the brand is in keeping with the licence terms and any brand guidelines. Failure to do that may lead to the risk of damage to the brand’s prestige and reputation.

• Terms governing the termination of a licence are vital. In this case, because there was no formal agreement in place, the licence was held to be “terminable at will”, with the result that as soon as the licence was terminated, Polistas had to stop marketing and selling Veuve Clicquot polo shirts. Clearly, a licensee holding substantial stocks of product could be left out-of-pocket in such circumstances. Licensees should instead make sure they have a post-termination sell-through period. However, from a brand owner’s perspective, such a sell-through period should be limited in time, to ensure exclusivity in the brand is maintained as soon as possible after termination.

• The decision also provides a reminder that the court can award damages where the scope of a licence is exceeded, and will seek to determine the amount that would reasonably have been agreed between the licensor and licensee to permit the licensee’s activities to take place

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Protecting distinctive products – the limits of passing off law

A distinctive product can be protected by way of registered design, which provides up to 25 years protection. Of course, many such products have a much longer business lifespan, and some brand owners have attempted to register the appearance of their products as trade marks. The requirements are onerous, however, and registration has been refused even in respect of famous products, such as the shape of the Lego brick and the Rubik’s Cube.

An alternative is to bring a passing off action. The leading English case on passing off confirmed that the shape of the “Jif Lemon” is protectable, and there are examples since of successful passing off claims in respect of shapes and designs e.g. Numatic’s “Henry” vacuum cleaner. The main difficulty faced by a brand owner bringing such a passing off action is to establish goodwill in the product’s appearance. It is not enough for the owner to show that the product is widely recognised – instead, the owner must go further and demonstrate that the public has come to rely on the product’s appearance (as opposed simply to the brand name) as an indicator of origin. The courts have explained that the requirement is that brand owner has “educated the public” to recognise the product by its appearance as well as by any brand name it uses.

In a recent case in the Intellectual Property Enterprise Court, the proprietor of the Tala conical kitchen measuring cup shown below, attempted to prevent a rival from selling a similar product. The Tala product has been sold since 1932, and the court found as fact that, prior to the Defendant commencing sales, no-one else had sold a similar-looking product in the UK. Despite that, however, the judge held that the proprietor had not succeeded in educating the public to recognise either the shape alone, or the shape plus surface decoration of a Tala cup, as indicative of trade origin.

The decision is a reminder of the difficulty of protecting product shapes outside of design law. Businesses are best advised to rely on brand names and logos where possible. If product shape protection is sought beyond the 25 year limit of registered designs, the best option is to seek registered trade mark protection, for which substantial evidence of steps taken by the proprietor to “educate the public” to recognise origin by shape alone will generally be required.

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Iceland v Iceland – The battle over a country name

The Icelandic government has commenced legal action against the UK supermarket chain, Iceland Foods, in a dispute over the latter’s EU trade mark registration for ICELAND, which is registered for a broad range of goods and services including meat and poultry, fresh fruit and vegetables, beer, mineral waters, coffee and tea and, of course, retail services. The government announced in September that legal action was being considered and last month, true to their word, invalidity proceedings were commenced at the EU Intellectual Property Office (“EUIPO”).

The dispute stems from the supermarket’s attempts to prevent Icelandic businesses from registering trade marks that include the word “Iceland”. Iceland Gold, a fish retailer, and Clean Iceland, a wholesaler of Icelandic national products, had both sought to register their name with EUIPO in recent years, but failed because of oppositions filed by the supermarket.

The arguments deployed by the government are that the word “Iceland” is devoid of any distinctive character, that it exclusively descriptive of goods or services that originate from Iceland. The government has also argued that because neither the supermarket, nor the goods or services supplied under the EU trade mark have any connection to the country of Iceland, consumers are likely to be deceived as to the origin of the goods and services.

The supermarket’s trade mark application was accepted for registration by EUIPO back in 2004, when EUIPO was more willing than it is now to accept geographic names as registered trade marks. The legal landscape has changed since 2004 and this case will be an interesting review of the registrability of country names as trade marks. The decision is of significant importance to both parties.

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“Should’ve” registered that one

Trade mark registrability issues rarely make the headlines, but when they do there’s usually a flurry of wild and inaccurate reporting, both by the national press and trade mark practitioners. Specsavers’ successful attempt to register the word “Should’ve” is a case in point.

The opticians applied to register their mark, which is of course a shortened version of their well-known strapline “Should’ve gone to Specsavers”. When UK Intellectual Property Office (“UKIPO”) accepted the application back in August, it was heralded as a “surprising decision”, with some trade mark practitioners arguing that it should never have been allowed, on the basis that the word “should’ve” is a generic term that imbues no distinctive character.

In reality, though, there’s no reason why Specsavers’ application should’ve been refused. There is no connection between the word and any of the goods and services applied for, the word isn’t descriptive, it isn’t laudatory and it doesn’t refer to any characteristics of the goods and services applied for. It’s difficult to see how UKIPO could possibly have refused the application.

In light of the widespread publicity surrounding Specsavers’ registration, it’s likely that other brand owners will now follow suit, by filing trade mark applications for simple single words.

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Photograph of spoon and peas: “erbsen” by ugod used under CC BY