England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (INTELLECTUAL PROPERTY)
ON APPEAL FROM THE TRADE MARKS REGISTRY
TRADE MARKS ACT 1994
The Hon Mr Justice Patten
CH/2006/APP/0160

		Royal Courts of Justice Strand, London, WC2A 2LL
		15/05/2007

Lord Justice Jacob:

1. This is a second appeal from concurrent decisions below, first in the Trade Marks Registry (Hearing Officer Mr M Reynolds, decision of 1^st February 2006) and then on appeal (Patten J, judgment of 26th July 2006, [2006] EWHC 1878 (Ch)). I granted permission to appeal on the papers because it seemed to me that a difficult and important question of European trade mark law might arise and thus there was a "compelling reason" for the grant of permission (CPR 52.3(6)). The course of argument before us confirmed that impression.
2. We told the parties we intended to refer questions to the European Court of Justice. There was then debate as to the form of these. In the end the questions are our questions: they differ slightly from those discussed at the hearing. In this judgment I will set out the facts, the legislation, the arguments, the questions and how and why I would answer the questions.

The facts

3. Intel Corporation Inc. is the appellant. It has and has had at all relevant times a "huge reputation" (to quote the hearing officer at [104]) in the word mark Intel for microprocessor products (chips and peripherals) and multi-media and business software – what can compendiously described as "computers and computer-linked products". Even though by and large end consumers do not themselves buy Intel products as such, the company's success in persuading computer manufacturers to use the slogan "Intel Inside" has very much contributed to the huge reputation of the mark. Anyone who saw the mark used in relation to computers or computer-linked products or services would take it as denoting a trade connection with appellant.
4. The appellant also has a large number of UK and CTM trade mark registrations (details are set out in the Appendix to the hearing officer's decision). They consist of or include the word "Intel". The goods and services covered by these registrations are in classes 9,16,38 and 42 – essentially computers and computer linked goods and services. It is common ground that these goods and services are dissimilar to the services of the mark in suit. Below it was argued that the dissimilarity was not all that great because the defendants' services might well involve the use of computers. That is an obvious nonsense – I expect the services also involve the use of telephones, paper, pens and office furniture.
5. The respondents, CPM United Kingdom Ltd., have a registered trade mark No.2,122,181 consisting of the word "Intelmark." It is registered in class 35 for "Marketing and telemarketing services" with effect from 31^st January 1997. The mark was coined as being short for Integrated Telephone Marketing. Prior to the date of registration there was some use of the mark in the form "CPM Intelmark" for some of these services but the evidence was scant. The Hearing Officer and Patten J decided that the case should proceed on the basis that the mark was unused as at its date of registration.
6. Under UK registered trade mark law it is a defence to a trade mark infringement action that the defendant is using his own UK registered mark for the goods or services for which it is registered (Trade Marks Act 1994, s.11(1)). There is no warrant for this provision in the Trade Marks Directive (89/104) and it is not clear that this is a permissible derogation from the Directive. Moreover there is no corresponding provision in the Community Trade Mark Regulation, so we have the completely irrational position of a defence of use of own mark in respect of a claim based on a UK registered mark but not to one based on a CTM.
7. Given this provision, CPM's registration stands in the way of a trade mark infringement action by the Appellants. A declaration of invalidity would remove the obstacle (see s.47(6)). It is such a declaration that is sought in these proceedings.
8. If the use of Intelmark for the services of the respondent would be likely to deceive a substantial number of persons into the belief that those services had a trade connection with the Appellants, then clearly the common law action for passing off would be available to prevent its use. But no action for passing off has been commenced, and in these proceedings a claim that use of Intelmark for those services would amount to passing off has been abandoned.
9. Accordingly this case must be decided on the basis that use of Intelmark does not suggest a trade connection with the appellants.
10. On the other hand the Intel mark is unique in the sense that it has not been used by anyone for any goods or services other than those of the appellants. Mr Engelman for CPM suggested that this was not proved and that it was up to the Appellants to prove this. But given that his clients attempted but failed to establish use (in other fields) by others, it is unrealistic to suppose that there is out there some other enterprise using Intel for some sort of goods or services. If such an entity existed it would have been found by the respondents who were trying to prove it.
11. Moreover Intel is "an invented word with no meaning or significance beyond the products which it identifies" (Patten J at [39]).
12. So "the reputation enjoyed by the INTEL mark would be sufficient for the average consumer to focus on INTEL in INTELMARK at least so as to bring to mind the INTEL mark" (Patten J at [42]). It is upon this "brings to mind" point that the case turns. Is a mere "bringing to mind" of an earlier mark with a reputation enough to prevent a later registration? And is it an infringement of a registered mark which has a reputation if a defendant uses, for dissimilar goods or services, a mark which merely "brings to mind" the registered mark?

The Legislation

13. The key legislation is the Trade Marks Directive. The UK Act of Parliament implementing it is the 1994 Act. No one suggests the Act has a different meaning from the Directive. Pointlessly it renumbers and to some extent re-words the language. Even more pointlessly, when the ECJ interpreted Art. 5(2) in Davidoff v Gofkid, Case 292/00, [2003] FSR 28 (p.490), the 1994 Act was amended by a Regulation so as to reflect that interpretation. If every time the ECJ interprets a Directive, which has been implemented in an Act using the words of the Directive, the Act is amended a host of little and pointless amendments will result, just causing confusion and cost. It should be remembered that such an Act will, without amendment, inevitably be interpreted in accordance with any decision of the ECJ on the Directive leading to the Act. There is no point in cluttering up Acts with little amendments which have no legal effect. The supposed justification – that it helps make things clearer for the public – is wrong. It just confuses.
14. Accordingly I confine myself to the Directive. The key provision reads:

Art. 4. Any Member State may furthermore provide that a trade mark shall not be registered or, if registered, shall be liable to be declared invalid where, and to the extent that:

(a) the trade mark is identical with, or similar to, an earlier national trade mark within the meaning of paragraph 2 and is to be, or has been, registered for goods or services which are not similar to those for which the earlier trade mark is registered, where the earlier trade mark has a reputation in the Member State concerned and where the use of the later trade mark without due cause would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark;

15. The infringement provisions of Art. 5(2) of the Directive contain the same language, providing that:

2. Any Member State may also provide that the proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade any sign which is identical with, or similar to, the trade mark in relation to goods or services which are not similar to those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

16. The Trade Mark Regulation contains the same two tests for refusal on the one hand and infringement on the other where the earlier trade mark has a reputation. Hence the answers to the questions we ask will apply to both national and CTM registrations.
17. Moreover – and this is the point of most importance – but for CPM's registration, the same issue would arise in an infringement action. So the real question is whether Intel's registrations for dissimilar goods preclude use of Intelmark for CPM's dissimilar services. If they do, then it is difficult to think of any goods or services which are not protected by the registrations: the same "dilution" argument would apply as much to use of Intel for nuclear power stations or bananas as it does to marketing services.

Intel's arguments

18. These are based on the "dilution" theory. This was well summarised by Advocate-General Jacobs in Adidas-Salomon v Fitness World Case C-408/01 [2004] FSR 21. He said:

"The scope of Article 5(2): dilution, degradation and free riding

AG36 Article 5(2) protects the proprietor of a mark with a reputation against use of an identical or similar sign where use of that sign "without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark". There are thus in principle four types of use which may be caught: use which takes unfair advantage of the mark's distinctive character, use which takes unfair advantage of its repute, use which is detrimental to the mark's distinctive character and use which is detrimental to its repute.

AG37 The concept of detriment to the distinctive character of a trade mark reflects what is generally referred to as dilution. That notion was first articulated by Schechter, who advocated protection against injury to a trade mark owner going beyond the injury caused by use of an identical or similar mark in relation to identical or similar goods or services causing confusion as to origin. Schechter described the type of injury with which he was concerned as "the gradual whittling away or dispersion of the identity and hold upon the public mind" of certain marks. The courts in the United States, where owners of certain marks have been protected against dilution for some time, have added richly to the lexicon of dilution, describing it in terms of lessening, watering down, debilitating, weakening, undermining, blurring, eroding and insidious gnawing away at a trade mark. The essence of dilution in this classic sense is that the blurring of the distinctiveness of the trade mark means that it is no longer capable of arousing immediate association with the goods for which it is registered and used. Thus, to quote Schechter again, "for instance, if you allow Rolls Royce restaurants and Rolls Royce cafeterias, and Rolls Royce pants, and Rolls Royce candy, in 10 years you will not have the Rolls Royce mark any more".

AG38 In contrast, the concept of detriment to the repute of a trade mark, often referred to as degradation or tarnishment of the mark, describes the situation where – as it was put in the well-known Claeryn/Klarein decision of the Benelux Court of Justice – the goods for which the infringing sign is used appeal to the public's senses in such a way that the trade mark's power of attraction is affected. That case concerned the identically pronounced marks "Claeryn" for a Dutch gin and "Klarein" for a liquid detergent. Since it was found that the similarity between the two marks might cause consumers to think of detergent when drinking "Claeryn" gin, the "Klarein" mark was held to infringe the "Claeryn" mark.

AG39 The concepts of taking unfair advantage of the distinctive character or repute of the mark in contrast must be intended to encompass instances where there is clear exploitation and free-riding on the coattails of a famous mark or an attempt to trade upon its reputation. Thus by way of example Rolls Royce would be entitled to prevent a manufacturer of whisky from exploiting the reputation of the Rolls Royce mark in order to promote his brand. It is not obvious that there is any real difference between taking advantage of a mark's distinctive character and taking advantage of its repute; since however nothing turns on any such difference in the present case, I shall refer to both as free-riding."

19. The Court did not find it necessary to decide whether this far-reaching view of the scope of protection was correct. The actual case was not concerned with dissimilar goods at all – the defendants' goods were identical with those covered by the specification of goods of the registered mark. Nor was the argument raised directly concerned with what is in issue here – the defendant was arguing that its two-stripe mark was a mere embellishment and not a trade mark at all.
20. It was in that context that the Court said:

[31] ….the protection conferred by Article 5(2) of the Directive is not conditional on a finding of a degree of similarity between the mark with a reputation and the sign such that there exists a likelihood of confusion between them on the part of the relevant section of the public. It is sufficient for the degree of similarity between the mark with a reputation and the sign to have the effect that the relevant section of the public establishes a link between the sign and the mark.

It went on to hold that if the facts showed that the mark was seen by the public purely as an embellishment that was not enough to establish "a link." On the other hand the mere fact that it was viewed as an embellishment was not enough to show that there was no link. If it was seen as an embellishment and as having a "link" that was enough for infringement.

21. Mr Mellor submitted, on behalf of Intel, that by "a link" the court meant any kind of mental association between the later mark and the earlier mark. So a mere "bringing to mind" of the earlier mark was enough. He suggested that Court was accepting A-G Jacobs' view by its use of the term "link."
22. He emphasised what the Court said in General Motors v Yplon SA Case C-375/97 [200] RPC 572 (Chevy for vehicles vs Chevy for detergents)

[30] If, at the end of its examination, the national court decides that the condition as to the existence of a reputation is fulfilled, as regards both the public concerned and the territory in question, it must then go on to examine the second condition laid down in Article 5(2) of the Directive, which is that the earlier trade mark must be detrimentally affected without due cause. Here it should be observed that the stronger the earlier mark's distinctive character and reputation the easier it will be to accept that detriment has been caused to it.

He submitted that where the earlier mark was both unique and had a strong distinctive character, one is compelled to accept that detriment to it will be caused by its use for virtually any other goods or services.

23. He also pointed out that the CFI appeared to accept A-G Jacobs' view, applying it in cases of dissimilar goods. He took us to Mülhens v Spa Monopole Case R 825/2004-2 [2005] ETMR 109 (SPA mineral water vs Mineral Spa) at [51]. Aktieselkabet v OHIM Case T-4777/04 (TDK for tapes vs TDK for clothing) at [65] and Sigla v OHIM Case T-215/03 (VIPS for restaurants cafes vs VIPS for computer programs for use in hotels etc).
24. He further suggested that where the prior mark was unique and well-known it was important to stop any encroachment at the outset. Otherwise it would suffer a death by a thousand cuts – as in Schecter's example of Rolls-Royce.
25. As regards the existing UK national decisions on the point, Mr Mellor submitted they were "in a mess" and wrong. It is not necessary to go to all of these. I mention just three. Firstly in Premier Brands v Typhoon Europe [2000] FSR 767 (Ty-Phoo for tea vs Typhoon for oriental kitchenware). Neuberger J said at p.789

Finally, it is right to mention that, as Mr Arnold also submitted, s.10(3) [which implements Art. 5(2)] is not intended to have the sweeping effect of preventing the use of any sign which is the same, or similar to, a registered trade mark with a reputation; nor is section 10(3) intended to enable the proprietor of a well known registered mark to be able to object as a matter of course to the use of a sign which may remind people of his mark.

26. Secondly in Electrocoin Automatics v Hitachi Credit [2005] FSR 7, Deputy Judge Geoffrey Hobbs QC said:

The presence in the market place of marks and signs which call each other to mind is not, of itself, sufficient for that purpose.

27. Thirdly there is a suggestion in the English cases that, at least for "unfair advantage" and perhaps also for "detrimental to distinctive character or repute" that the later mark should have an effect or be likely to have an effect on the economic behaviour of the consumer" for it to infringe under Art. 5(2) or be barred from registration under Art. 4(4)(a), see Electrocoin at [102].
28. Mr Mellor submits that all three of these cases are wrong. I am far from confident that they are. But on the other hand I can see that the extent of Art. 5(2) and 4(4)(a) calls for further consideration by the Court. I therefore think the Court should be asked the following questions:

The questions

1. For the purposes of Art. 4(4)(a) of the First Council Directive 89/104 of 21^st December 1988, where:

(a) the earlier mark has a huge reputation for certain specific types of goods or services,

(b) those goods or services are dissimilar or dissimilar to a substantial degree to the goods or services of the later mark,

(c) the earlier mark is unique in respect of any goods or services,

(d) the earlier mark would be brought to mind by the average consumer when he or she encounters the later mark used for the services of the later mark,

are those facts sufficient in themselves to establish (i) "a link" within the meaning of paragraphs [29] & [30] of Adidas-Salomon AG v. Fitnessworld Trading Ltd, Case C-408/01, [2003] ECR I-12537 and/or (ii) unfair advantage and/or detriment within the meaning of that Article?

2. If no, what factors is the national court to take into account in deciding whether such is sufficient? Specifically, in the global appreciation to determine whether there is a "link", what significance is to be attached to the goods or services in the specification of the later mark?

3. In the context of Art. 4(4)(a), what is required in order to satisfy the condition of detriment to distinctive character? Specifically, does (i) the earlier mark have to be unique, (ii) is a first conflicting use sufficient to establish detriment to distinctive character and (iii) does the element of detriment to distinctive character of the earlier mark require an effect on the economic behaviour of the consumer?

My opinion

29. I would answer question 1 "no." I do not see that trade mark law need be so oppressive and all powerful. I would hold that a "link" requires more than such a tenuous association between the two marks. If a trade mark for particular goods or services is truly inherently and factually distinctive it will be robust enough to withstand a mere passing bringing to mind when it or a similar mark is used for dissimilar goods or services. The average consumer is a reasonably sensible individual. He is used to lots of trade marks in different fields – some of which may resemble trade marks for other fields. In this country for example, for a long time Jif lemon juice and Jif washing up liquid co-existed happily, not to mention Jiffy for padded bags and condoms. Sometimes, but perhaps not surprisingly, trade mark owners of big brands want more protection than they really need.
30. Of course where a mark is really strong and the later allegedly conflicting mark is the same, the facts may simply go beyond a mere calling to mind. They may cause the consumer to think there is a trade connection between the owner of the former mark and the user of the later mark or at least wonder whether there is such a connection. Clearly the former case ought to be protected, and perhaps the latter too if the wonder is substantial as opposed to fleeting.
31. Consider Schecter's example of Rolls-Royce. If that trade mark were used for pants (the American word for trousers) I suppose these days some members of the public might speculate that there is some sort of licensing arrangement. I do not say they would – that would depend on an investigation into the facts. If they really did, then it could well be that Art. 5(2) would apply.
32. However one must be careful with Schecter's example in any event. It subtly goes a bit too far. For however much Rolls-Royce were used for dissimilar goods, it would be wrong to say it would not exist for cars and jet engines. (Actually there are two Rolls-Royces now, with no harm to either caused by the existence of the other).
33. But in any event the analogy with Rolls-Royce in this case is not apt. The later mark is not the same as the former. There is no suggestion that the average consumer would think or even speculate about any commercial link. Perhaps this is because as a word Intel is not as inherently strong as, for instance, Kodak or Rolls-Royce. Whether that is so or not does not matter. The suggested "link" in my view is too tenuous to be a foundation for entitling the trade mark owner to a monopoly in all or virtually all goods or services.
34. There is another way in which one reaches the same result. When the legislation refers to "detrimental to the distinctive character or repute of the earlier trade mark" it must mean the distinctive character or repute of the earlier mark for the goods or services for which it is registered. In other words the character is tied to the goods or services of the earlier mark. Arts. 4(4)(a) and 5(2) do not call for a general inquiry about whether distinctiveness is affected, it is only distinctiveness for the goods or services of the earlier mark which matters.
35. Turning to question 2, the further factors which I think should be taken into account are:

(a) Whether, having regard to the nature of the goods or services for which the later mark is used, the average consumer would consider that there is an economic connection between the owners of the two marks.

(b) Whether the distinctiveness or repute of the earlier mark for the goods or services for which it is registered is really likely to be affected if the later mark is used for the specific goods or services covered by its registration.

36. As for question 3, I would answer it as follows. What is required to satisfy the condition of detriment to distinctive character depends on a realistic global appreciation of the position. Mere general speculation about harm will not be enough. In making the global appreciation, there are at least the following factors which should be considered:

i) whether the "pulling power" of the earlier mark for its specific goods or services is really likely to be affected by the use of the later mark for its specific goods or services

ii) whether the user of the later mark is likely to get a real commercial advantage from its use for its specific goods or services by reason of the repute of the earlier mark for its specific goods or services,

iii) whether, if the earlier mark is unique, it really matters that it is used for the dissimilar goods or services of the later mark,

iv) where the later mark is not the same as the earlier mark what difference that will make on the average consumer and in particular whether there is merely a calling to mind of the earlier mark,

v) whether the economic behaviour of the average consumer in relation to the earlier mark when used for its goods or services is likely to be affected,

vi) how inherently distinctive the earlier mark is, and

vii) how strong the reputation of the earlier mark for its goods or services is.

37. I would not attempt to produce a comprehensive list of factors – others may occur in the overall global appreciation. In the end it must be a question of degree. I would emphasis in my answer that it is very important that the harm or prospect of harm must be real and tangible. A mere possibility or assertion of damage is just too remote and would leave trade mark owners in too monopolistic a position. Trade mark law is there to protect a proper system of competition, not to provide trade mark owners with overreaching rights which may obstruct trade.

Lord Justice Keene:

38. I agree.

Lord Justice Mummery:

39. I also agree.