A Spoonful of IP (October 2015)

erbsen

October 2015 issue

In this issue:

* Descriptive names as trade marks
* Revocation of trade marks for non-use – in how many countries must a Community trade mark be used?
* The “own name” defence in trade mark infringement – can it apply to company names?
* Product shapes as trade marks
* Patent infringement – when can you plead innocence?
* IP infringement – damages for convoyed sales

Descriptive names as trade marks

Two decisions of the Intellectual Property Enterprise Court, The Sofa Workshop Limited v Sofaworks Limited and The Ukelele Orchestra of Great Britain v Clausen, demonstrate a potential pitfall in registering descriptive marks as Community trade marks (“CTM”). In the first, the proprietor of two CTMs for the name SOFA WORKSHOP sued the defendant in respect of its use of the name “Sofaworks”. In the second, the proprietor of the CTM for the name THE UKULELE ORCHESTRA OF GREAT BRITAIN sued the defendant in respect of its use of the name “The United Kingdom Ukulele Orchestra”. Each defendant counterclaimed that the CTMs were invalidly registered.

The judge held that the both names inherently “consist exclusively of signs which may serve in trade to designate a characteristic of some of the goods/services for which those marks are registered”. The claimants argued that the names had become distinctive in consequence of use made, in each case, since the mid 1980s. The judge found that each mark has become distinctive of the claimant’s products/services in the UK. However, as the marks were CTMs, it was necessary for each claimant to show that its mark has acquired distinctiveness in all EU countries in which the average consumer is liable to recognise its descriptive character. English is an official language in Ireland and Malta, and is spoken widely within the EU, particularly in Scandinavian countries, the Netherlands and Cyprus, so demonstrating acquired distinctiveness in at least those countries would be required.

In the Sofa Workshop case, the claimant had engaged in limited trading outside the UK, and was unable to show any acquired distinctiveness outside the UK. In the Ukelele Orchestra case, whereas the claimant established distinctiveness in the UK and Germany, it was unable to do so elsewhere. The CTMs were accordingly invalidly registered.

Both claimants did in fact succeed in their actions on the basis of passing off, but the key point arising is that applying for a Community trade mark is unlikely to be advisable in circumstances where the applicant is relying on acquired distinctiveness, unless the use made of it has been widespread throughout the EU. If it has not, applying for national trade marks in the countries in which it has actually gained distinctiveness is likely to be the better option.

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Revocation of trade marks for non-use – in how many countries must a Community trade mark be used?

A trade mark, once registered, must be used in relation to the goods/services for which it is registered. If not put to genuine use in connection with any particular category of goods/services for which it is registered for a period of five years, it can be revoked (in relation to the unused goods/services) on application by a third party.

For UK marks, anything more than token or internal use will generally suffice, and even a low level of commercial use of a UK trade mark within the UK will normally defeat an application for revocation for non-use.

In the Sofa Workshop case referred to in the previous article, HHJ Hacon has ruled that “in order to maintain a Community mark, some evidence should be required that the mark has been used to create or maintain a share in the market for the relevant goods or services across a section of the EU extending beyond one Member State”. As Sofa Workshop had made very limited use of its mark outside the UK (it was apparently able to point only to a single such sale, the judge held that the CTM should be revoked for non-use.

This is a developing area of law, and it remains to be seen whether HHJ Hacon’s approach is followed by other courts and/or approved by the appeal and European courts. Nonetheless, it provides another reason for applicants to consider applying for national, rather than Community marks, if they are intending only to use the mark in one (or, perhaps, a small number of) country/countries.

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The “own name” defence in trade mark infringement – can it apply to company names?

It is a defence to a claim for trade mark infringement to show that the mark being used is the defendant’s “own name or address … provided he uses them in accordance with honest practices in industrial or commercial matters”. Companies as well as individuals can rely on the defence, but its scope is restricted in relation to company names, as otherwise it would be open to abuse. The courts look closely at the circumstances in which a company name was adopted – if it was adopted to take advantage of a registered mark, the defence will not apply.

The Court of Appeal in Assos of Switzerland v ASOS may have extended the scope of the defence, although as we explain later it is unlikely to make much difference going forward. The claimant, Assos, is a designer and manufacturer of high quality cycling garments. It began trading in the 1970s and owns a number of registered trade marks for the name Assos. The defendant, ASOS, is a global online fashion and beauty retail business. It began to use the name ASOS in 2002, and changed its name to ASOS plc in 2003. Assos sued ASOS for trade mark infringement and passing off.

The Court of Appeal held that whereas the defendant was prima facie infringing the mark, it could rely on the “own name” defence. The defendant established that it was not aware of Assos’s marks when adopting the name ASOS, although it admitted that no trade mark searches were conducted in 2002, relying only on a Google search against ASOS, which did not reveal the marks. The Court held that the decision to adopt the ASOS name in those circumstances fell within the scope of “honest practices”, and that the defendant was not infringing Assos’s marks.

The decision is about to become superseded by other events. The EU has announced a raft of changes to trade mark law across the EU, including restricting the “own name” defence only to natural persons. In the meantime, whereas ASOS plc has, to date, successfully defended the claim, it will have been put to considerable time and irrecoverable expense in doing so. Avoiding a dispute arising in the first place is almost always the better option, and only a proper set of trade mark searches can achieve this. We would therefore recommend that such searches are done before any new trading or company name is adopted.

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Product shapes as trade marks

Shapes of products and their packaging can, in principle, be registered as trade marks. The term of protection for a trade mark can be perpetual, in contrast to the limited term of a registered design. The rules for shape marks are more restrictive than for more traditional marks, however, and a shape cannot be registered “if it consists exclusively of (a) the shape which results from the nature of the goods themselves; (b) the shape of goods which is necessary to obtain a technical result; or (c) the shape which gives substantial value to the goods”.

The registered trade mark protecting Lego’s well-known figure (below left) was recently challenged.

Lego1      Lego2

A challenge on ground (a) was rejected because the applicant had failed to put forward supporting argument or evidence. In considering challenge (b), the Court stressed that the words “exclusively” and “necessary” are important and must be applied strictly. Whereas the holes in the figure permit interconnection with other Lego pieces, many of the aspects of the figure are not dictated by such technical considerations. The challenge was therefore rejected, and the validity upheld.

The decision can be contrasted with that concerning the shape of the Lego brick (above right), in which the mark was ruled to be invalid, as the shape was necessary to perform the technical result of connecting it to another brick. It is clear, therefore, that the fact that a shape has technical functional significance is not necessarily fatal to its registration as a trade mark, provided the shape also has non-technical aspects which give rise to distinctiveness.

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Patent infringement – when can you plead innocence?

Patent infringement is a tort of strict liability i.e. it is not a defence for a defendant to say it was unaware of the patent, or that its product infringed the patent. Section s. 62(1) of the Patents Act 1977 states, though, that no damages or account of profits shall be awarded if the defendant can prove that it was not aware, and had no reasonable grounds for supposing, that the patent existed.

The decision in Ooo Abbott v Design & Display Limited, illustrates the difficulty of reliance on s. 62(1). The defendant’s MD gave evidence that whereas he had heard of patents, he did not know whether any of his colleagues had. He also said that he was completely unaware of its competitors’ activities at the time the patented product had been introduced.

In rejecting the defence, the judge said:

“I think that to satisfy the burden under s.62(1) it would have been necessary for Design & Display to have produced satisfactory evidence from the sales department to show that the complete indifference to competition and therefore to any patent protection which the competition held, or alternatively total ignorance of the concept of patent protection, both of which Mr Lloyd relied on, ran throughout the company. Absent that, I would by default have inferred that Mr Lloyd or his sales colleagues had reasonable grounds to have become aware of the PCT parent application for the Patent, which was published in June 2006.”

Satisfying the above is likely to be onerous, and the ability of a retailer to rely on s. 62(1) should therefore not be assumed. Clearly, carrying out patent searches for every product line is unlikely to be commercially viable, so retailers should, at the very least, put IP warranties and indemnities in place with suppliers, and satisfy themselves that suppliers i) have carried out the necessary infringement searches; and ii) can be relied upon to indemnify the retailer for any losses suffered.

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IP infringement – damages for convoyed sales

It is often the case that a rights owner can expect to make, for each sale of a product in which it owns IP rights, sales of other goods/services e.g. spare parts, accessories, maintenance services etc. Such sales are termed “convoyed sales”. The decision in Alfrank Designs Limited v Exclusive (UK) Limited provides a useful illustration of the rules regarding recovery for convoyed sales. The claimant owned unregistered design rights in certain table designs. The defendant sold a number of infringing tables. The claimant sought the profit it would have made on the tables it said it would have sold (held to be 20% of the defendant’s sales), but also on chairs, coffee tables and other goods which it said it would have sold alongside the tables.

The claimant produced statistical evidence on the average number of convoyed sales it made per table. The judge held that it was not enough merely to show a statistical link, saying:

“… if a supermarket claimant were to prove beyond doubt that for every packet of its own-brand cornflakes sold, statistically 0.23 tins of beans are sold to the same customer, together with 0.11 large wholemeal sliced loaves and so on, sales of the latter would not on that evidence have been caused by the sale of the cornflakes. In my view, to make good any claim to damages for loss of sales of convoyed goods, the claimant must prove that, assessed objectively, there was a causative link in the mind of the purchaser between his or her purchase of the infringing product and their purchase of one or more other specific products.”

On the facts, however, the judge accepted that consumers, wishing to purchase more than one item, typically decide first which dining table they like. Having made that decision, they then commonly buy items of occasional furniture which go with the table. The choice of table therefore “drives” the sales of other furniture, and the judge allowed the claimant’s claim for damages for convoyed sales.

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