Counterclaim for invalidity based on earlier common-law rights fails to see off trade mark infringement claim

In an action for infringement of the trade mark CRYPTOBACK (Wirex Ltd v Cryptocarbon Global Ltd & Ors [2021] EWHC 617 (IPEC) (16 March 2021)) the defendants argued that they had earlier rights to the name, and also that the application to register it had been made in bad faith, but acknowledged that if they lost on their counterclaim they were infringing the trade mark.

 

The counterclaim was therefore a slightly unusual s.5(4) claim, based on the defendants’ ability to oppose the registration because they had common law rights that, in other circumstances, would have enabled them to sue for passing off. The test for passing off is set out in Lord Oliver’s judgment in Reckitt & Colman Products Ltd v Borden Inc [1990] 1 WLR 491 and the present case turned on whether the defendants (counterclaimants) had goodwill in the word. To succeed, they had to convince Hacon J that the name had been distinctive of their services at the claimant’s filing date.

 

The name was plainly a neologism, formed by merging elements of the words “cryptocurrency” and “cashback”. A neologism is not inherently non-distinctive, but it could be taken by consumers to be a new word for a type of goods or services, especially when used for something innovative. Linoleum Manufacturing Company v Nairn [1878] 7 Ch. D. 834 illustrates the problem: the product was protected by patents, which were assigned by the inventor to the plaintiff company which he set up to exploit them, but the name “linoleum”, coined by the inventor to denote the product, was used to denote the substance not (exclusively) the source of the substance, so the defendant could not be stopped from marketing his product as “Linoleum floor-Cloth” after the patents expired.

 

The evidence did not support Global’s contention that they owned goodwill in the name when the trade mark was applied for. There had been email campaigns, a web article and an invoice, but that did not amount to enough to impress the judge. To make matters worse for Global, in the few months of use before the filing date, they had actually applied the name CCRBBACK to their service, which made it more likely that CRYPTOBACK would be seen as a generic name for a new type of service.

Online EU trade mark infringement actionable where advertising directed

Infringement proceedings involving an EU trade mark must generally be brought before the courts of the member state in which a defendant is domiciled (Regulation 207/2009/EC, Article 97(1)). They can also be brought before the courts of the Member State “in which the act of infringement has been committed or threatened” (Article 97(5)). What happens when the defendants are a Spanish company and a Spanish individual, and the trade mark owners are British (and the exclusive licensee is an English company)? Obviously an action could be brought in Spain, but could the claimant sue in the UK on the basis of Article 97(5)??

The claimants issued proceedings for infringement in the Intellectual Property Enterprise Court, on the basis that the defendants' online activities amounted to advertising or offering counterfeit goods for sale in the UK. IPEC refused to accept jurisdiction under Article 97(5), taking the view that only the courts in Spain, where steps had been taken to put the offending sign on a website, or decision to that effect had taken place, had jurisdiction under that provision. The claimants appealed, and the Court of Appeal sent the matter on an expedition to Luxembourg.

The Court of Justice ruled that Article 97(5) allowed the trade mark owner to bring infringement proceedings before an EUTM court of the Member State where the consumers or traders to whom online advertising and offers for sale were directed were located. It made no difference that took decisions and steps necessary to bring about the electronic display in another Member State.

The Court reasoned that, if Article 97(5) were interpreted otherwise, a defendant could deprive Article 97(5) of any effect by making sure that the territory where they set up their website and activated the display of their advertising and offers for sale was the same as that in which it was established.

The Court of Appeal has to decide whether the advertising and offers for sale on the website and platforms in issue were in fact targeted at UK consumers or traders. It must do so on the basis of factors such as the details about the geographical areas where the products were to be delivered.
AMS Neve Ltd and others v Heritage Audio SL and others (Case C-172/18) EU:C:2019:674

My favourite passing-off case

In an area of law where the cases are, almost by definition, often highly amusing, Rolls-Royce Motor Cars v Dodd [1981] FSR 519 is in a class of its own. John Dodd, the proprietor of an automatic transmission repair business, built his own car - actually taking over a rolling chassis which someone else had started and building a body on it - powered by a second-world-war vintage Rolls-Royce Merlin engine. The first iteration used an engine from a Centurion tank, rather less romantic than had it come from a Spitfire, the most celebrated machine in which the Merlin was used: the second car (its predecessor having been destroyed in a fire) had an engine from a bomber (a Mosquito, apparently). It also had a very different body style. Both cars featured a Rolls-Royce radiator grille and Spirit of Ecstasy mascot, at least until the manufacturer (whose company secretary at the time happened also to be called John Dodd) took him to court where Walton J granted an injunction to prevent passing off (referring to the car as a Rolls-Royce) and infringements of the company's trade marks.

Following the case, Mr Dodd started referring to the car as The Beast. When he promised the judge that he would change the name, Walton J asked where was Beauty. Perhaps in the eye of the beholder?

Thanks to the Internet, I find that Mr Dodd, who moved to Spain after he had breached the injunction within a couple of days (Whitford J fined him £5,000), is still running his automatic transmission repair business. Better still, YouTube has several clips of The Beast in action, including this one from an old edition of Top Gear. The embedded one below includes Mr Dodd executing a doughnut in it, sadly filmed from inside the car so you have to rely on his daughter's commentary.

BBC News - Oxford University wins claim against Oxford Law School

BBC News has this entertaining story which deserves a wide audience. The Oxford Law School was located in Eastleigh, Hampshire, a railway town 62 miles down the A34 and before it became a seat of legal learning famous for the first flight of the Spitfire (manufactured nearby in Southampton), as the place where Benny Hill had his first job (on Woolworth's, and his second job, as a milkman), and as the constituency of Chris Huhne before he became Steward of the Chiltern Hundreds.

The case is not yet reported on BAILII but rest assured I will let you know when I see it there. It is a judgment of Judge Janet Lambert in the trendily-renamed Intellectual Property Enterprise Court (the 'enterprise' part allowing the audit-obsessed government to tick a box somewhere, I assume). The defence seems to have been that even a moron in a hurry would not have been deceived (the BBC report elides trade mark infringement and passing off, so it is  not clear what cause of action was involved: perhaps both), which indicates that the principal ought to attend some of the School's lectures - that hypothetical individual plays no part in determining whether deception or confusion occurs. As I wrote of that phrase in my Dictionary of Intellectual Property Law:

A regrettable expression in this day and age, first used by Foster J in Morning Star Cooperative Society v Express Newspapers Limited [1979] FSR 113 (a different day and age, perhaps). The publishers of the Communist Party newspaper sought an injunction to prevent Express Newspapers from launching a new tabloid newspaper under the name The Daily Star, which was light on politics (especially of the left-wing variety) and heavy on the sort of photographic works not seen, for ideological as well as aesthetic reasons, in the Morning Star.

The judge asked whether the plaintiffs could ‘show a misrepresentation express or implied that the newspaper to be published by the defendants is connected with the plaintiffs’ business and that as a consequence damage is likely to result to the plaintiffs’ and stated that ‘if one puts the two papers side by side I for myself would find that the two papers are so different in every way that only a moron in a hurry would be misled.’

Tata Motors moves court against trademark infringement | Business Standard

Tata Motors moves court against trademark infringement | Business Standard

Cipriani: using your own name

Hotel Cipriani SRL have, I find, been in the law reports before, in fact just last month. The day before yesterday Mr Justice Arnold gave judgment in a major trade mark infringement and passing off case involving the same company, Hotel Cipriani SRL and others v Cipriani (Grosvenor Street) Ltd and others [2008] EWHC 3032 (Ch), not yet on Bailii, although there are state aid cases and other exciting reports of Cipriani litigation). It's an old story: family sets up business, sells out to another (usually larger, multinational, corporate) party with little sense of history and none of humour, then another member of the family sets up another business (perhaps a long way away) under the family name, and gets sued by the humourless multinational.

Humour and trade mark ownership, of course, rarely go together. I often tell my audiences on training courses that trade mark owners must suspend their senses of humour: if you have a well-known trade mark (and I don't mean that in the specialised Paris Convention sense, necessarily, especially because no-one really knows what that means anyway) you have to wield a big stick at every pizza restaurant, night club, escort agency, one-man building firm or teenage computer programmer who threatens the distinguishing function or (which is sometimes different) value of your trade mark. So I am not criticising the Italian company (actually, that should be plural as there were three claimants in the action, according to the IPKat), rather the mindset that places the protection of every little bit of intellectual property above more conventional forms of competition.

Well, perhaps that isn't happening here, but it's not a case where I feel instinctively that the IP owner was in the right. Maybe that's because I was acting a couple of years ago in a similar dispute - also in the hospitality industry, as we should now call it - and my client was on the receiving end. There, the nasty corporate had a Community trade mark but no discernible intention of trading in the Community. They were carving out an exclusive position that they might never wish to exploit: and meanwhile there were businesses in the Community with legitimate reasons to use the same name - indeed, like the Cipriani case, there was a "common origin" issue.

In the present case, the defendant's restaurant was called Cipriani London and usually referred to (there being little need most of the time to identify the city) as just Cipriani (as its website does this morning, though probably not for long). The claimants were companies in the Orient Express group. Both the Venice and the London establishments were set up by members of the family, though the Venice hotel had been sold on some time ago (on terms that don't seem to have protected the family's rights to carry on using its name, though perhaps that was just not on offer at the time) and the London restaurant is owned by a group of companies of which the most important was Cipriani (Grosvenor Street) Limited.

The defendants conceded that their activities were prima facie infringements, but that they could use their own name (section 11 of the Trade Marks Act 1994). The judge held that there was an infringement as the distinctive element in the defendant's sign was the name Cipriani, and then went on to say that the "own name" defence was not available because Cipriani was the company's trading name, not its own name. This is difficult to grasp without the full judgment: would the answer have been different had the company been Cipriani Limited? Surely if Cipriani is the distinctive part of the trading style ("London" adding nothing), it is also the distinctive part of the company name, "(Grosvenor Street)" adding nothing (though the address is Davies Street, incidentally) and "Limited" not making a ha'porth of difference. Had the defence applied, the judge didn't think it would extend to the trading name anyway.

The claimants also won on passing-off, as they had customers here when the restaurant opened and had foreign customers who booked direct (although i don't understand quite what difference that makes). They had a substantial reputation her, and more importantly they had valuable goodwill too.

There is a lot about this case that will require careful thought when the judgment becomes publicly available. It is more than an example of David losing out to Goliath, though it does not seem to be one of those cases of over-reaching intellectual property rights that trouble me so often. Perhaps what my reaction comes down to is an instinctive sense that customers will patronise all the four establishments concerned on the strength of the Cipriani name, and the connection between the family and the Orient Express businesses will never go away completely. The parties, like parties to similar disputes including that of my former client, should learn to live with it: no-one needs a monopoly over a mere name.

The Court of Appeal [2010] EWCA Civ 110 upheld Arnold J’s judgment (24 February 2010), though Lloyd LJ expressed some reservations about the ‘direct bookings’ test, which he thought might in the Internet age be outmoded although the case before him did not provide an opportunity to deal with the matter.