Court of Appeal of England and Wales rules on validity of trade mark in light of prior existing localized goodwill

Court of Appeal of England and Wales rules on validity of trade mark in light of prior existing... Abstract Caspian Pizza Limited, Behzad Zarandi, Nadar Zand, Caspian Franchise Holdings Limited v Maskeen Shah, Malvern Hills Estates Limited [2017] EWCA Civ 1874 In Caspian v Shah the Court of Appeal of England and Wales considered whether a trade mark could be invalidated on the grounds of prior existing third party goodwill in a confined geographical area. It ruled that, under section 5 (4) Trade Marks Act 1994, goodwill established in a specific locality is capable of preventing registration of a countrywide mark: it is not necessary for goodwill to be established nationwide. Legal context Section 47 Trade Marks Act 1994 (TMA 94) provides the procedural means of challenging the validity of a registered trade mark: (2) The registration of a trade mark may be declared invalid on the ground— […] (b) that there is an earlier right in relation to which the condition set out in section 5(4) is satisfied, unless the proprietor of that earlier trade mark or other earlier right has consented to the registration. Section 5(4) TMA 94 provides the procedural means of opposing a trade mark prior to it being registered, on the basis of prior existing goodwill in that mark: A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented— by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade, […] A person thus entitled to prevent the use of a trade mark is referred to in this Act as the proprietor of an “earlier right” in relation to the trade mark. Two cases with conflicting outcomes were considered in Caspian v Shah: SWORDERS Trade Mark dated 28 July 2006 (O-212-06) and Redd Solicitors LLP v Red Legal Ltd [2012] EWPCC 54. In SWORDERS, an opposition proceedings decision, the Hearing Officer refused registration of a mark which had been used by the opponent in a locality in respect of similar services to those for which the trade mark was applied. In Redd, however, Judge Birss QC (as he then was), sitting in the High Court, dismissed the defendant’s claim that the claimant’s trade mark was invalid, even though the defendant had acquired, prior to the registration, goodwill in the mark sufficient to found an action for passing off. The judge considered the defendant to have only a locality defence enabling it to use the mark in the location in which it had been using the unregistered mark. Facts The proprietors and licensee of a word mark comprising the word ‘Caspian’ and a device mark featuring the word ‘Caspian’ started trade mark infringement proceedings for the unauthorized use by the defendants of the name ‘Caspian Pizza’ for a pizza business, after an alleged informal franchise agreement had ended. The trial judge, HHJ Hacon, had ruled that the word mark had been invalidly registered under section 5(4) TMA 94, because the defendants had established prior goodwill in the CASPIAN name, sufficient to found an action for passing off. HHJ Hacon declined to follow the decision in Redd, under which prior local use was found not to establish a ground of invalidity under section 5(4) TMA 94. However, the trial judge considered that the device mark was valid and infringed, as the logo within the device mark had only been used by the defendants after registration. The claimants appealed against HHJ Hacon’s decision to invalidate the word mark and the defendants cross-appealed against the trial judge’s findings that the device mark was valid and infringed. Analysis The Court of Appeal upheld HHJ Hacon’s ruling that the word mark ‘Caspian’ had been invalidly registered. Patten LJ (with whom Gloster LJ and David Richards LJ concurred) ruled that it was implicit in the provisions of section 5(4) TMA 94 that an opposition based on the existence of ‘earlier rights’ did not have to rely on use throughout the UK or in a part of the UK overlapping with the place in which the trade mark applicant carried out its business using the same or a similar mark. The judge followed the reasoning in SWORDERS, rather than Redd, and considered that the only requirement for an opponent to a trade mark application is that goodwill has been established in a local area, and that that goodwill is suitable to qualify for protection in passing off proceedings. The Court of Appeal considered that the position would be the same in respect of a challenge to validity brought under section 47 TMA 94, made after a trade mark has been registered. As such, the Court of Appeal upheld the finding that the word mark had been invalidly registered. In respect of the device mark, the Court of Appeal considered that the word CASPIAN was the ‘essential and most prominent’ feature of the device mark. As such, and on the basis that the trial judge had considered that use of the word ‘Caspian’ could have been restrained in an action for passing off and that there was nothing in the evidence or in the pre-registration history to distinguish the origin of the device mark from that of the word mark, the Court of Appeal considered that the validity of the word mark and device mark should have been considered together. Accordingly, the court declared the device mark invalidly registered. Practical significance The decision provides helpful clarification on the weight to be attributed to earlier localized rights in deciding on the validity of a mark: goodwill established in a specific locality is capable of preventing registration of a countrywide mark and it is not necessary for goodwill to be established nationwide. In the same way, once a trade mark has been registered, prior localized goodwill is capable of invalidating a mark under section 47 TMA 94. Businesses considering registration of marks should make due diligence enquiries and find out whether the unregistered version of the mark has been used by other businesses, even if only in confined localized areas. Less distinctive marks in respect of goods and services are more likely to be already in use and, as a result, present a higher risk of being invalidated on the basis of prior existing rights. © The Author(s) 2018. Published by Oxford University Press. All rights reserved. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Intellectual Property Law & Practice Oxford University Press

Court of Appeal of England and Wales rules on validity of trade mark in light of prior existing localized goodwill

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Publisher
Oxford University Press
Copyright
© The Author(s) 2018. Published by Oxford University Press. All rights reserved.
ISSN
1747-1532
eISSN
1747-1540
D.O.I.
10.1093/jiplp/jpy035
Publisher site
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Abstract

Abstract Caspian Pizza Limited, Behzad Zarandi, Nadar Zand, Caspian Franchise Holdings Limited v Maskeen Shah, Malvern Hills Estates Limited [2017] EWCA Civ 1874 In Caspian v Shah the Court of Appeal of England and Wales considered whether a trade mark could be invalidated on the grounds of prior existing third party goodwill in a confined geographical area. It ruled that, under section 5 (4) Trade Marks Act 1994, goodwill established in a specific locality is capable of preventing registration of a countrywide mark: it is not necessary for goodwill to be established nationwide. Legal context Section 47 Trade Marks Act 1994 (TMA 94) provides the procedural means of challenging the validity of a registered trade mark: (2) The registration of a trade mark may be declared invalid on the ground— […] (b) that there is an earlier right in relation to which the condition set out in section 5(4) is satisfied, unless the proprietor of that earlier trade mark or other earlier right has consented to the registration. Section 5(4) TMA 94 provides the procedural means of opposing a trade mark prior to it being registered, on the basis of prior existing goodwill in that mark: A trade mark shall not be registered if, or to the extent that, its use in the United Kingdom is liable to be prevented— by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade, […] A person thus entitled to prevent the use of a trade mark is referred to in this Act as the proprietor of an “earlier right” in relation to the trade mark. Two cases with conflicting outcomes were considered in Caspian v Shah: SWORDERS Trade Mark dated 28 July 2006 (O-212-06) and Redd Solicitors LLP v Red Legal Ltd [2012] EWPCC 54. In SWORDERS, an opposition proceedings decision, the Hearing Officer refused registration of a mark which had been used by the opponent in a locality in respect of similar services to those for which the trade mark was applied. In Redd, however, Judge Birss QC (as he then was), sitting in the High Court, dismissed the defendant’s claim that the claimant’s trade mark was invalid, even though the defendant had acquired, prior to the registration, goodwill in the mark sufficient to found an action for passing off. The judge considered the defendant to have only a locality defence enabling it to use the mark in the location in which it had been using the unregistered mark. Facts The proprietors and licensee of a word mark comprising the word ‘Caspian’ and a device mark featuring the word ‘Caspian’ started trade mark infringement proceedings for the unauthorized use by the defendants of the name ‘Caspian Pizza’ for a pizza business, after an alleged informal franchise agreement had ended. The trial judge, HHJ Hacon, had ruled that the word mark had been invalidly registered under section 5(4) TMA 94, because the defendants had established prior goodwill in the CASPIAN name, sufficient to found an action for passing off. HHJ Hacon declined to follow the decision in Redd, under which prior local use was found not to establish a ground of invalidity under section 5(4) TMA 94. However, the trial judge considered that the device mark was valid and infringed, as the logo within the device mark had only been used by the defendants after registration. The claimants appealed against HHJ Hacon’s decision to invalidate the word mark and the defendants cross-appealed against the trial judge’s findings that the device mark was valid and infringed. Analysis The Court of Appeal upheld HHJ Hacon’s ruling that the word mark ‘Caspian’ had been invalidly registered. Patten LJ (with whom Gloster LJ and David Richards LJ concurred) ruled that it was implicit in the provisions of section 5(4) TMA 94 that an opposition based on the existence of ‘earlier rights’ did not have to rely on use throughout the UK or in a part of the UK overlapping with the place in which the trade mark applicant carried out its business using the same or a similar mark. The judge followed the reasoning in SWORDERS, rather than Redd, and considered that the only requirement for an opponent to a trade mark application is that goodwill has been established in a local area, and that that goodwill is suitable to qualify for protection in passing off proceedings. The Court of Appeal considered that the position would be the same in respect of a challenge to validity brought under section 47 TMA 94, made after a trade mark has been registered. As such, the Court of Appeal upheld the finding that the word mark had been invalidly registered. In respect of the device mark, the Court of Appeal considered that the word CASPIAN was the ‘essential and most prominent’ feature of the device mark. As such, and on the basis that the trial judge had considered that use of the word ‘Caspian’ could have been restrained in an action for passing off and that there was nothing in the evidence or in the pre-registration history to distinguish the origin of the device mark from that of the word mark, the Court of Appeal considered that the validity of the word mark and device mark should have been considered together. Accordingly, the court declared the device mark invalidly registered. Practical significance The decision provides helpful clarification on the weight to be attributed to earlier localized rights in deciding on the validity of a mark: goodwill established in a specific locality is capable of preventing registration of a countrywide mark and it is not necessary for goodwill to be established nationwide. In the same way, once a trade mark has been registered, prior localized goodwill is capable of invalidating a mark under section 47 TMA 94. Businesses considering registration of marks should make due diligence enquiries and find out whether the unregistered version of the mark has been used by other businesses, even if only in confined localized areas. Less distinctive marks in respect of goods and services are more likely to be already in use and, as a result, present a higher risk of being invalidated on the basis of prior existing rights. © The Author(s) 2018. Published by Oxford University Press. All rights reserved. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices)

Journal

Journal of Intellectual Property Law & PracticeOxford University Press

Published: Mar 13, 2018

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