England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICECHANCERY DIVISION

		Royal Courts of JusticeStrand, London, WC2A 2LL
		19 December 2001

Jacob J

Introduction and background facts

1. These are two appeals from two decisions each dated 19^th June 2001 of Dr Trott acting for the Registrar of Trade Marks. The decisions relate to parallel closely allied disputes between the same parties, namely the trade mark proprietors, Laboratoires Goemar and the applicants for revocation, La Mer Technology Inc., part of the Estée Lauder group. There are two registrations, each of the words LABORATOIRE DE LA MER. One is in class 5 (No.1,338,514), the other in class 3 (No. 1,402,537).
2. I asked why there were two decisions rather than one. I was told that this is Registry Practice - as it is a requirement that evidence (largely duplicative) be separately filed in two proceedings. The registry should look at this practice again. There is no sense in requiring duplicative material. It increases costs and in fact makes cases harder to handle. It surely ought to be possible, even in the absence of any rule formally allowing for consolidation of proceedings, simply to order that evidence in one proceeding shall be treated as evidence in both, or to permit that evidence be sworn in more than one proceeding.
3. The specifications of goods are as follows:

Class 3 "Perfumes and cosmetics containing marine products; all included in Class 3"

Class 5 Pharmaceutical, veterinary and sanitary products, dietetic products for medical use; all included in Class 5 and all containing marine products."

4. The marks were applied for in 1989 and 1988 respectively. They each had been on the register for more than 5 years at the date (27^th March 1998) of the applications. The applications were for complete revocation, pursuant to the provisions of s.46(1) of the Trade Marks Act 1994. This provides, so far as is material:

"The registration of a trade mark may be revoked on any of the following grounds:

(a) that within the period of five years following the date of completion of the registration procedure it has not been put to genuine use in the United Kingdom, by the proprietor or with his consent, in relation to the goods or services for which it is registered, and there are no proper reasons for non-use;

(b) that such use has been suspended for an uninterrupted period of five years, and there are no proper reasons for non-use."

5. The provision is an unnecessary re-write of the Trade Marks Directive 89/104. Art. 10 reads:

"If, within a period of five years following the date of the completion of the registration procedure, the proprietor has not put the trade mark to genuine use in the Member State in connection with the goods or services in respect of which it is registered, or if such use has been suspended during an uninterrupted period of five years, the trade mark shall be subject to the sanctions provided for in this Directive, unless there are proper reasons for non-use."

Art.12(1) reads:

"A trade mark shall be liable to revocation if, within a continuous period of five years, it has not been put to genuine use in the Member State in connection with the goods or services in respect of which it is registered, and there are no proper reasons for non-use; however, no person may claim that the proprietor's rights in a trade mark should be revoked where, during the interval between expiry of the five-year period and filing of the application for revocation, genuine use of the trade mark has been started or resumed; the commencement or resumption of use within a period of three months preceding the filing of the application for revocation which began at the earliest on expiry of the continuous period of five years of non-use, shall, however, be disregarded where preparations for the commencement or resumption occur only after the proprietor becomes aware that the application for revocation may be filed."

6. I propose to work off the Directive. Neither counsel suggested that our Act meant anything different. But by going to the Directive one gets the advantage of the recitals which form so vital a part of interpretation. One is simply wasting one's time with any part of the Act which seeks to implement the Directive - I have said so before. I found that, when I was asked to sit in the Court of Appeal, the other, permanent, members of the Court, namely the President and Kennedy LJ, agreed, see Commissioners of Customs & Excise v Century Life, 19^th December, 2000.
7. It is common ground that the key question in the case of each mark is whether it has been "put to genuine use" within the relevant period "in connection with the goods in respect of which it is registered." The relevant period is the 5 years expiring on 27^th March 1998.
8. Our Act, sensibly, explicitly requires the trade mark owner, to prove use of his mark when non-use is alleged. Probably that is implicit under the Regulation too, for who is to know most about the details of use other than the owner of the mark? The way the UK Act puts it is in section 100:

"If in any civil proceedings under this Act a question arises as to the use to which a registered trade mark has been put, it is for the proprietor to show what use has been made of it."

9. In the present cases, use was not proved well. Those concerned with proof of use should read their proposed evidence with a critical eye - to ensure that use is actually proved - and for the goods or services of the mark in question. All the t's should be crossed and all the i's dotted. In the present cases there was a difference between the total sales figures and relevant sales. Mr Mellor, for the applicants for revocation, told me that sorting out the wheat from the chaff involved a lot of work. In the end, however, he accepts that some very small potentially relevant sales under the marks were proved.
10. Before I turn to those details, I should say what little can be gleaned from the evidence about the proprietors. They are a French company based in St Malo and specialising in seaweed products. From their brochure (which I note is in English) they appear to be in a modest, but not a very small, way of business. The brochure claims that the company has sales in 25 countries, quite a number of products and some patents. More cannot be said because no information is directly given about the company by any of the witnesses on its behalf.
11. So far as business for the relevant period in the UK is concerned, sales were very limited. They amount to about £600 worth of goods said to be (the point is in dispute) within the class 5 registration and about £800 which are accepted to be within the class 3 registration. Other goods, outside the specifications of goods, were sold too. Estimating roughly about £6000 of all kinds were sold within the relevant period – though it is not shown there were under the mark in question.
12. The sales were not over a continuous period. What happened was that the company appointed an agent, Health Scope Direct Ltd. This was a small enterprise, based in Banff, Scotland. It appears to have made preparations to sell the products via a "Tupperware" system, i.e. appointing members of the public as sub-agents who were to sell via private parties. Whether that ever got off the ground is not disclosed, even though the owner of Health Scope gave some evidence touching other matters. Mr Mellor, rightly in my judgment, submits that no inference as to sales to the public should be drawn. The onus lies on the trade mark owner - if sales to the public were to be proved, it would seem nothing could have been easier.
13. In the result the only sales which can directly be relied upon are the £600 and £800 to the agent. Mr Tritton, for the company had an argument that certain other goods should have been included for the class 3 case. The first of these involved a weak argument that a moisturising soap should be regarded as a cosmetic. The other involved the Registry drawing an inference from some cryptic words on invoices when the matter could have been laid to rest by explicit evidence. As I have said it is not for the Registry to do that when use is to be proved. In any event, even if the sales of the products concerned were within the specification of goods, it would only have made a difference of a hundred pounds or so. Mr Tritton accepted that this would make no difference to the case.
14. Since no use was shown for "perfumes" (Class 3) or "Pharmaceutical, veterinary and sanitary products", the Hearing Officer revoked the registrations to the extent that they covered these goods. From that, there is no appeal.

The "for medical use" point (class 5)

15. I am therefore left with two issues. The first relates only to the Class 5 registration. The actual goods sold came in little bottles in boxes. They went by the general names "Geoform Fitness" The words of the trade mark, Le Laboratoire de la Mer, appearing on the box. They are described in the company's literature as "a range of dietary supplements formulated with seaweed." The same literature says, "Health food supplements are not medicines." There were four products, a magnesium supplement, a general tonic, a blood circulation improver, and digestion aid. Whether any of them work is not in issue. It is not suggested that any of these products would be prescribed, or even recommended by a doctor or nurse. The issue is whether these goods fall within the description dietetic products for medical use.
16. The hearing officer held that they were, though it is not entirely clear why. This is probably because the argument before him was more convoluted than that before me. It ran something like this:

(a) If a product is a medicine it requires a licence (under the Medicines Act 1968 or the Food Safety Act 1990);

(b) These products did not have such a licence.

(c) So either they are not medicines (and hence not for medical use) or, if they are medicines, the trade in them was illegal and cannot be relied upon as genuine use.

17. I do not think that way of approaching the issue helps. Before one gets to genuine use, one should simply decide whether the goods fall within the specification. That depends on their nature (including their intended purpose), the wording of the specification and nothing else.
18. Approaching the question that way here one asks two questions: are these dietetic products, if so, are they for medical use? Mr Mellor concedes they are the former but not the latter. Yes, he says you may take these as a special part of your daily diet. Moreover you may take them because you believe or hope they do you good, but that does not make them for medical use. Mr Tritton submitted that any product which proclaimed specific health benefits should be regarded as one for medical use. I do not agree. The normal connotation of a medicine is something for the treatment (whether by alleviation or cure) of disease. These products are for perfectly healthy people. They are to keep them that way, not treatment. I do not think the ordinary citizen would regard these products as for medical use.

Why the meaning of "genuine use" is important

19. I now turn to the Class 3 case. Here the problem is much more significant legally - what amount and kind of use will suffice to prove that a mark has been put to genuine use within the meaning of Art.10? It is worth stating in some detail why the question is so important. There are a number of reasons:

(a) There is an obvious strong public interest in unused trade marks not being retained on the registers of national trade mark offices. They simply clog up the register and constitute a pointless hazard or obstacle for later traders who are trying actually to trade with the same or similar marks. They are abandoned vessels in the shipping lanes of trade.

(b) The 8^th recital of the Directive gives express recognition of that public interest. It says:

"Whereas in order to reduce the total number of trade marks registered and protected in the Community and, consequently, the number of conflicts which arise between them, it is essential to require that registered trade marks must actually be used or, if not used, be subject to revocation."

(c) The same goes for Community Trade marks. Again there is an express recognition of the importance of use. This is in the 9^th Recital of the Community Trade Mark Regulation which reads:

"Whereas there is no justification for protecting Community trade marks or, as against them, any trade mark which has been registered before them, except where the trade marks are actually used."

(d) The wider the specifications of goods or services permitted by the registration authorities, the greater the extent of the problem of unused marks.

(e) In practice there is likely to be a greater problem caused by wide specifications in the case of Community marks than in the case of, at least, UK marks. For UK registrations, the application form (TM3) requires the applicant or his agent to say

"The trade mark is being used by the applicant or with his or her consent, in relation to the goods or services stated, or there is a bona fide intention that it will be so used."

If that statement is untrue then it seems fairly plain that the registration is vulnerable to an attack as one made in bad faith (s.3(6) of the UK Act, implementing Art. 3(2)(d) of the Directive). There is no such requirement in the case of Community Trade Mark Applications (see the requirements for the content of the application in rule 1 of the Implementing Regulation 2868/95). An applicant for a CTM does not expressly have to say he uses or intends to use the mark applied for. So, unless the mere making of an application is taken as an implicit statement of an intention to use, then a bad faith attack based on any lack of intention to use (under Art. 51(1)(b) of Regulation 40/94) may fail. The First Cancellation Division of OHIM so held in Trillium TM (Case C000053447/1, March 28^th 2000). The decision is not particularly satisfactory (see the criticisms in Kerly's Law of Trade Marks and Trade Names, 13^th edn. at para. 7-230). If it is right, however, there is simply no deterrent to applicants seeking very wide specifications of goods or services for CTMs - with all the greater potential for conflict that may give rise to. I understand that in practice OHIM are quite content to permit such very wide specifications - indeed often all the goods or services within a class are asked for and granted. The Trillium point will undoubtedly come up again - for it seems bizarre to allow a man to register a mark when he has no intention whatever of using it. Why should one have to wait until 5 years from the date of registration before anything can be done?

(f) Whatever the width of the "umbra" of the specification, it should also be remembered that the holder's rights to stop infringement or prevent registration of a later similar mark extend to the "penumbra" of "similar goods" (s.10(2) of the UK Act, Art. 5(1)(b) of the Directive and Art.9(1)(b) of the Regulation). A wide umbra means there is an even wider penumbra. Other traders with a similar mark may not go into either the umbra or penumbra, whether by use or registration.

20. Thus it is that the jurisdiction to remove for non-use is very important. It may be the only way of dealing with covetous specifications, albeit it can only come into play after 5 years from the date of registration. It is important that the procedure can be made to work very fast (as, for instance, in this jurisdiction, by a direct application to the court rather than the Registry). It is also necessary that it operates on clear principles. It is those principles which fall to be considered here.

Why a reference is necessary

21. What, then, does put to genuine use mean? Mr Mellor contends that I posed the right test in Euromarket Designs v Peters (Crate & Barrel) [2000] ETMR 1025:

"It seems to me that "genuine use" must involve that which a trader or consumer would regard as a real or genuine trade in this country. This involves quantity as well as the nature of the use. In part it is a question of degree and there may be cases on the borderline. If that were not so, if Miss Vitoria were right, a single advertisement intended for local consumption in just one United States city in a journal which happened to have a tiny United Kingdom distribution would be enough to save a trade mark monopoly in this country. Yet the advertisement would not "sham". This to my mind shows that Miss Vitoria's gloss on the meaning of "genuine" is not enough. And the only stopping place after that is real trade in this country. I think all the examples relied upon are examples of trade just in the United States."

22. The Crate & Barrel case involved three types of very minor use. The three uses were: a few items bought in America by American customers who asked the shop to send the goods as presents to people here, United Kingdom residents sending orders to the US for goods to be supplied in the US via a "wedding gift" scheme, and "spillover" circulation of US magazines. The point was really whether any of those uses should be regarded as uses for a trade under the mark "Crate & Barrel" in this country. The point was not the same as in this case, which is whether a very limited amount of use definitely in this country can be regarded as sufficient to be "genuine".
23. It is that question which seemed to me to be so important as to justify a reference to the European Court of Justice. The precise form of the question remains for discussion with Counsel.

My opinion

24. Before I say more about it I will, as both sides asked, give my own provisional views on the question. I begin by recounting the experience which we had in this country under our prior legislation. This required that there be "bona fide use" of a trade mark within a relevant period (see s.26 of the Trade Marks Act 1938). For many years it was thought that if a trader contrived to make small sales of goods under a registered trade mark, his purpose did not matter. Companies, particularly large ones, used to indulge in "trade mark protection programmes". Any mark which they wished to protect from a non-use attack would be specially applied to a product normally sold under some other trade mark. Minor sales of these specially marked products were made often to friendly retailers; no real advertising or marketing efforts would support the sales. The idea was that any sales would do. That idea was exploded in a case called Imperial Group v Philip Morris [1982] FSR 72. Imperial wanted to stop Philip Morris from introducing a brand of cigarettes called "Merit". They had a registration of the word "Nerit". If valid, Merit would probably infringe. But Nerit had not been used. So Imperial arranged for packs of Nerit cigarettes to be prepared and sold on a limited scale. They were in fact just the same as Imperial's Embassy brand. About a million Nerit cigarettes were sold, mainly from independent outlets. But the whole point of the exercise was to establish "bona fide" use of the mark and not to establish a brand which had profitable sales. The English Court of Appeal held that the use was not bona fide.
25. Following that case at least some companies dropped trade mark protection programmes. Whether they have been revived following the introduction of the CTM and the new European trade mark laws I do not know. I hope they have not, for it seems to me that the position as regards intention behind the use is a major factor in deciding whether a use is "genuine" within the meaning of the European legislation.
26. In other English cases, where there was no question of a hidden motive behind the use, the courts were prepared to regard even small quantities of sales under the mark as sufficient to constitute bona fide use. A little use coupled with genuine intention to establish a market in goods under the mark would suffice (Bon Matin TM [1989] RPC 538).
27. Thus under our old law there was no rule of de minimis. If a use was only slight, that might, depending on other circumstances, show that the trader was not genuine in his activities, as for instance in the Nerit case or another similar case, Concord TM [1987] RPC 209. One would compare the use actually made with the size of the organisation, how it and similar entities normally went about marketing and so on. A big trader who had made only limited sales would particularly have to explain what was going on. If the main or a principal motive was trade mark protection rather than simply making sales under the mark, then the use was not "bona fide".
28. I turn to the present, European, legislation, focusing on the adjective "genuine." Other languages may not convey quite the same flavour. The corresponding adjectives used in other language versions of the legislation are, in French "serieux", German "ernsthaft", Italian "effettivo", Spanish "efectivo", Portuguese "serio", Dutch "normaal", Danish "reel" and Swedish "verkligt". The researches of counsel did not provide the Greek or Finnish words, but no matter. The flavour of some of the words used may mean that use must be more than very slight, even where that use has been without ulterior purpose. "Serious" may mean that insubstantial does not count. If that is so, a further question would arise: "how do you decide that a use is too slight to count?" After all what might be "slight" for a large company might be not insignificant for a small one.
29. Now my own answer. I take the view that provided there is nothing artificial about a transaction under a mark, then it will amount to "genuine" use. There is no lower limit of "negligible." However, the smaller the amount of use, the more carefully must it be proved, and the more important will it be for the trade mark owner to demonstrate that the use was not merely "colourable" or "token", that is to say done with the ulterior motive of validating the registration. Where the use is not actually on the goods or the packaging (for instance it is in advertisement) then one must further inquire whether that advertisement was really directed at customers here. For then the place of use is also called into question, as in Euromarket.
30. I think that formulation fits exactly with what I said in Crate & Barrel. As a matter of commerce small sales are nonetheless sales under and so uses of the mark. The objective observing trader or consumer would so say. The absence of any purpose, other than trying to sell goods under the mark, would lead him to the conclusion that the uses were genuine.
31. Moreover there are real problems if one tries to formulate a de minimis rule. Does the amount of use depend on the size of the trade mark owner's enterprise? Does it matter whether he is relying upon use by importation rather than local sale? How little is too little? Does it matter whether the use is in the beginning, middle or end of the relevant period? And so on.
32. Nor do I think that the absence of a de minimis rule significantly affects the policy behind the legislation. Yes, marks must be used within the relevant period, but there seems no reason to make a trader who has actually made some small, but proper, use of his mark, lose it. Only if his use is in essence a pretence at trade should he do so. And of course, if he has only made limited use of his mark it is likely that the use will be only for a limited part of his specification of services. If he has a wider specification that can and should be cut back to just those goods for which he has made use. That would leave him with just a small umbra and a correspondingly reduced penumbra.
33. I am somewhat confirmed in my view by the travaux preparatoire. As early as 1976 the Commission proposal for a CTM (Supplement 8/76 to the Bulletin of the European Communities) said, at para. 127:

"It is also essential that a 'genuine', and not merely token, use of the trade mark should be taken to comply with the user requirements. ..... Individual questions must be left to the Courts, which should apply strict, rather than liberal standards.

34. One provision, relied upon by Mr Tritton, does not assist. He points to Art. 10(2)(b) which says that:

"affixing of the trade mark to goods or to the packaging thereof in the Member State concerned solely for export purposes"

"shall constitute use."

Mr Tritton says this shows you do not actually have to prove an act of trade. True, but so what? The use still has to be genuine. You would not establish genuine use if all you had done was to put the mark on a few goods and exported them for a non-commercial purpose. Actually the real point of Art.10(2)(b) is to ensure that use solely for export still counts as use of the mark within the Member State. There is an obvious argument to the contrary in the absence of such a provision. In the UK, under the 1905 Act, that was so. And, the House of Lords in Reddaway's Appn. 44 RPC 27, held that export use only could not be relied upon to establish distinctiveness. To reverse that decision, the 1938 Act contained a new provision, s.31, to do much the same job as is now done by Art. 10(2)(b).

35. I turn to the present case. No one suggests that the trade mark proprietor was, in making his limited sales to the customer in Scotland, doing anything other than trying (albeit ineffectually) to build up a profitable trade under the mark in this country. Apart from the actual sales, the evidence of other sales, and of a re-start after the relevant date support that. A reasonably clear picture emerges. The French company found a potential distributor here. That distributor bought goods within and without the specification. The distributor, however, failed. The French company remained interested in selling here and then found another distributor who has done a little better, albeit not within the relevant period and only for dietetic supplements, not class 3 goods. The proprietor cannot rely upon any sales beyond those actually made for the relevant goods within the relevant period to establish use. But he can rely upon these other matters (the £6,000 worth of sales of other goods within the period and finding a new and more effective agent shortly thereafter), as evidence of the genuiness of his trade in general and so of the £800 worth of the sales under the mark. They show it was not mere tokenism.
36. Accordingly, so far as the Class 5 registration is concerned, I allow the appeal. As far as the Class 3 registration is concerned I would, left to myself, dismiss it. However, for the above reasons, I do not do so. Instead I seek the guidance of the European Court of Justice. Counsel should formulate draft questions.