Neutral Citation Number: [2011] EWCA Civ 645
Case No: A3/2010/1724
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY
THE HON MR JUSTICE ARNOLD 
Claim No. HC10C00483
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 27/05/2011
Before :

LORD JUSTICE MUMMERY
LADY JUSTICE BLACK
and
SIR JOHN CHADWICK
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Between :

	OMEGA  SA	Appellant	
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	OMEGA ENGINEERING INCORPORATED	Respondent	

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MR MICHAEL BLOCH QC and MR MICHAEL EDENBOROUGH QC (instructed by Laytons) for the Appellant

MR HENRY CARR QC and MR HUGO CUDDIGAN (instructed by Collyer-Bristow LLP) for the Respondent

Hearing date: 15th March 2011
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Judgment

Lord Justice Mummery:
The appeals 
1.	This is an appeal by the defendant Omega SA (Swiss) from the order of Arnold J dated 25 June 2010 entering summary judgment in favour of the claimant Omega Engineering Inc (Engineering) for breach of contract by Swiss. The judge also dismissed an appeal by Swiss from the decision of the Registrar of Trade Marks on 12 November 2009.  An application for permission to adduce further evidence was also dismissed. It is not pursued on this appeal.
2.	On 24 August 2010 Jacob LJ granted Swiss permission to appeal against the summary judgment and for a second appeal from the Registrar of Trade Marks. Both appeals turn on the same very short point of construction of a written agreement made by the parties on 11 April 1984 (the 1984 Agreement).
3.	Swiss says that there is a question of trade mark law in the case. It concerns  the legal effect of the class of goods or services for which a trade mark is registered: is the effect of the class of goods the same when considering registration of a mark and when considering use of a mark?
4.	Engineering says that the case is not about trade mark law at all. It sees this purely and simply as a contract case in which the disagreement is about the meaning of the 1984 Agreement.  
Procedural background 
5.	Since 1906 Swiss, a Societe Anonyme with a principal place of business in Bienne, Switzerland, has had trade mark registrations for OMEGA for the equivalent of class 14 in the United Kingdom.  The registrations correspond to Swiss’s core business of timing pieces. Swiss is the only registrant for OMEGA trade marks in class 14, which includes “horological and chronometric instruments.”  
6.	Engineering’s application for registration of the mark OMEGA sparked off another spat in an acrimonious long running battle between the parties. Swiss’s opposition to the application failed, but not on a trade mark ground: Swiss’s problem is that, in the view of both the Hearing Officer and Arnold J, the 1984 Agreement contractually prevents Swiss from opposing Engineering’s application.
7.	Swiss appealed from the Hearing Officer to the High Court. Engineering then started proceedings against Swiss for breach of the 1984 Agreement in opposing its trade mark application and in bringing the appeal and applied for summary judgment against Swiss under CPR Part 24 for an injunction and damages for breach of contract. 
8.	Arnold J heard together both the appeal by Swiss and the summary judgment application by Engineering. As indicated above, he dismissed the former and granted the latter. Were his decisions wrong? That is the question in this court.

1984 Agreement: construction and breach
9.	The circumstances of the 1984 Agreement and the intentions of the parties, as expressed in its detailed terms, are all relevant to a decision on its meaning and effect. It was entered into as a co-existence agreement between two parties with different businesses: Swiss for watches and clocks, Engineering for scientific instruments, such as thermometers. However, there was some potential for confusion, unless precautions to prevent it were taken. The parties used similar names. Some of their products were similar in certain respects, in particular thermometers that included a time display. 
10.	The parties agreed upon the terms of the 1984 Agreement so that their businesses could co-exist without conflict. The aim was to minimise the risk of confusion between their respective commercial activities under the sign OMEGA. Measures to avoid confusion in the market between their goods were agreed, particularly relating to the use of OMEGA. It was agreed that particular goods would not be put on the market under the name OMEGA.
11.	The background was that Swiss’s wristwatches and other chronometers have been known by names that include OMEGA for over 100 years. Engineering, a company established in 1962 in the State of Delaware, USA, has, since it began, been using OMEGA on products for the measurement and control of temperature. Its range of products has expanded to include instruments for the measurement and control of humidity, pressure, strain, force, flow, level pH and conductivity.      
12.	Turning from the circumstances of the 1984 Agreement to its actual terms, I adopt the numbering of the clauses added by the judge to its unnumbered provisions.  Swiss agreed-
“[5]… not to object to the use or registration by Engineering of trade marks consisting of or comprising the word OMEGA or the Greek letter OMEGA or elements colourably resembling the above elements in respect of the excluded goods”   
13.	What were “the excluded goods”? That expression was defined as:-
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           “[3]. ..Instruments and apparatus intended for a scientific or industrial application in measuring, signalling, checking, displaying or recording heat or temperature (including such having provision to record heat or temperature over a period of time and/or to display the time of day).”  
14.	Clauses [3] and [5] in the 1984 Agreement did not mention classes of goods for which trade marks may be registered. Swiss submits that that fact does not prevent the statutory classification of goods from being taken into account as affecting the construction of the description of goods in the 1984 Agreement. It submits that the definition of “the excluded goods” in clause [3] is a sub-set of goods that, at the date of the 1984 Agreement, fell within class 9. That class  did not include clocks. They fell within class 14. Swiss says that the registration now applied for by Engineering and opposed by Swiss goes beyond “the excluded goods” covered by class 9 and that the registration sought is capable of covering clocks covered by class 14. Swiss therefore claims that clause [5] of the 1984 Agreement does not prevent it from opposing Engineering’s application.       
15.	Other terms of the 1984 Agreement provided that the areas of commerce covered by it were divided up by the parties. Engineering agreed in clause [2] not to use OMEGA or that sign for temperature measuring instruments or apparatus incorporating a time of day display, unless intended for science or industry. For its part Swiss agreed in clause [4] not to use or register OMEGA for “the excluded goods”, being scientific or industrial thermometers, including those with a clock or watch. The area of potential overlap is thermometers with clocks. The division there is that Swiss is not to sell them for science or industry and Engineering is not to sell them except for science and industry.
16.	Those provisions reflected the overall aim of the parties to avoid confusion between each other’s products. Subsidiary provisions were included in the 1984 Agreement to bring the position on trade mark registrations into line with its primary provisions. They included an agreement by Engineering in clause [3] to withdraw its applications for rectification of registrations and an agreement by Swiss to remove “the excluded goods” from the registrations and not to object to the use or registration by Engineering of OMEGA for “the excluded goods.”           
17.	Engineering filed its first application on 21 May 2007 to register the trade mark OMEGA in respect of various goods in classes 9 and 14. The class 14 application remains in issue on the appeal. The specification of goods for that application was originally “Instruments and apparatus intended for a scientific or industrial application in measuring, signalling, checking, displaying or recording heat or temperature (including such having provision to record heat or temperature over a period of time and/or to display the time of day)”. The specification was subsequently divided for the purposes of another application so that the goods were all within the meaning of “the excluded goods” as defined in the 1984 Agreement. Swiss objected to and prosecuted objections to Engineering’s  application pointing out that it was the first time since the 1984 Agreement that Engineering had invoked the 1984 Agreement in respect of applications made in respect of classes other than class 9.   
18.	Both the Hearing Officer and Arnold J concluded that Engineering was correct in its contention that Swiss was bound by its contractual undertaking in clause [5] not to oppose Engineering’s application to register OMEGA for the goods specified in its application . 
Judgment of Arnold J 
19.	In finding against Swiss the judge accepted Engineering’s three main arguments on the construction of the 1984 Agreement.
20.	First, the definition of “the excluded goods” in clause [3] was not by reference to the class of the goods, such as goods “in class 9.” The definition simply referred to specified goods. No express reference is made to limiting the goods  to class 9 goods. There is no room for the implication of a reference to goods in class 9. 
21.	Secondly, in the context of the whole agreement, it was clear that clause [5] was dealing with use of the name in the market by the parties in the course of trade and not with the classification of goods for the purposes of registration of marks. The undertaking by Swiss, which extended to the use of unregistered trade marks, could not be construed as depending upon the particular class of goods in which it was sought to register “the excluded goods.”      
22.	Thirdly, trade mark classifications can and do change, so that, if “the excluded goods” were subsequently moved from class 9 to any other class, the restrictions on Swiss would, on Swiss’s construction of the 1984 Agreement, no longer apply. In consequence the confusion which the agreement seeks to avoid would no longer be prevented. That would not achieve the intentions of the parties. 
Submissions by Swiss
23.	Swiss submits that Arnold J made errors of law or principle in his construction of the 1984 Agreement. The detailed points are more daunting in number than they are in substance. As is the way with the contested construction of documents, much the same thing is said over and over again, either in the agreed words of the document, or in words that do not appear in the document,  and from every possible angle. 
24.	Mr Michael Bloch QC for Swiss concentrates on the definition of “the excluded goods” in the 1984 Agreement. He says that it applies only to goods in class 9, of which they form a sub-set. So clause [5] does not prohibit Swiss from objecting to an application by Engineering to register the mark OMEGA for goods in class 14. Clause [3] is also relied on as containing an agreement to cancel “the excluded goods” from the existing UK registration in class 9.  Although no particular class is expressly mentioned in the 1984 Agreement, it is argued that, by necessary inference, “the excluded goods” are defined as goods belonging to Class 9: the excluded goods are defined by reference to a registered trade mark, which is registered for Class 9 goods only.  
25.	The 1984 Agreement is characterised by Mr Bloch as being primarily concerned with issues of registration of trade marks rather than with the use of trade marks in trade. This is shown by the fact that the operative parts are concerned only with the wording of the specification of the goods detailed in the registrations of the trade marks in question. Thus, the scope of the obligation in clause [5] depends on the class of goods.
26.	As for authority, the judge is criticised for not following the decision of this court in Altecnic Ltd’s Trade Mark [2001] EWCA Civ 1928; [2002] RPC 34, which is cited by Mr Bloch for the proposition that the statement of the trade mark class number has an effect on the scope of the application for registration. Swiss says that the trade mark classification of goods is relevant to the scope of the obligations in clauses [2], [4] and [5] of the 1984 Agreement. The clause [5] undertaking not to object to registration should be construed as depending on the class in which Engineering seeks to register the mark.
27.	As for the objection that the classification of goods can change for trade mark purposes, it is submitted that the construction contended for by Swiss allows for goods to change class and that the changes in classification support Swiss’s construction. It does not allow for the original definition of “the excluded goods” to change, though that is potentially the result of Engineering’s construction.
28.	Reliance is also placed on the lack of any provision in the 1984 Agreement relating to Swiss’s Class 14 registrations. On Engineering’s construction those registrations ought to be amended to remove “the excluded goods” but they have not been so amended.      
Discussion and conclusions
29.	Classification is relevant to the outcome of these appeals, though not in the sense submitted by Mr Bloch. As a guide to the resolution of this appeal I prefer a broad contextual classification of the case to the classification of “the excluded goods” for the purpose of trade mark registration.
30.	In my judgment, this is a case of a contract aimed at demarcating the respective fields of goods concurrently marketed by the parties using similar marks rather than a trade mark case involving the classification of goods in a registration or use context. The appeal turns on gathering and giving effect to the intentions of the parties expressed in the wording of the applicable terms. The surrounding circumstances, including the object and subject matter of the 1984 Agreement, must be taken into account.
31.	In his judgment Arnold J included a substantial and interesting section (paragraphs 4-30) examining the legal framework of the classification of trade marks. He cited from paragraph [42] of the judgment in Altecnic, a case on the application of the ordinary principles of the construction of documents to  determining the scope of a trade mark application. It was held that a statement by an applicant in his application form selecting the Class numbers of goods, in respect of which registration was sought, could be taken into account in resolving an ambiguity in the list of the specification of goods in the application form.
32.	I do not question the accuracy of Arnold J’s exposition of trade mark law or the proposition that the 1984 Agreement must be construed against its legal and factual background. I am doubtful, however, about the assistance that can be derived, in construing clause [5], from the state of the relevant trade mark law on classification of goods at the date of the 1984 Agreement, or at the date of Swiss’s alleged breach of it, or from the decision of this court in Altecnic.
33.	In my judgment, the two critical points on construction of clauses [3] and [5] are that (a) neither clause expressly refers to class 9 or to class 14 of the classification of goods under the Trade Mark Acts and (b) it is not necessary for the purposes of business efficacy of the terms of the 1984 Agreement and therefore not justified to imply references to those classes into the 1984 Agreement.
34.	In the course of argument Sir John Chadwick identified the underlying source of the difficulty in the trade mark classification argument advanced by Swiss. He pointed out that the definition in clause [3] of the expression “the excluded goods” appeared to serve two different purposes: the first was specifically in relation to the agreed cancellation by Swiss from an existing UK registration for “the excluded goods”; the second was a more ambitious free-standing use of the definition for the purpose of demarcating the respective fields of future use in the form of Swiss’s undertaking not to object to the use or registration of trade marks consisting of or comprising the word OMEGA or the Greek letter by Engineering in respect of “the excluded goods.” 
35.	In my judgment, the judge was right to prefer the submissions of Engineering on the construction of the 1984 Agreement to those of Swiss. The reasons given by him were more than sufficient to justify his conclusion that Swiss has acted in breach of contract by objecting to the very goods accorded to Engineering by the 1984 Agreement.                   
Result
36.	I would dismiss the appeal.  Arnold J’s construction of the 1984 Agreement was correct. It reflected its language, as illuminated by its context. There is no necessity for making the reasons for the decision on this appeal any more elaborate than that. There was no error by the judge in his decision to grant summary judgment to Engineering or in his decision to dismiss the appeal by Swiss from the Hearing Officer.  
Sir John Chadwick:
37.	I agree.
Lady Justice Black:
38.	I also agree.