England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		23 July 2002

Mr Justice Jacob:

1. This is an appeal from a decision dated 11 May 2001 of the UK Trade Marks Registry. As soon as I read the papers I realised this case involved a difficult question of principle and as such had to be referred to the European Court of Justice. The parties have asked me to state my reasons for making the reference but not to go so far as to provide my own provisional answer.
2. The appellant is a company called Nichols Plc. It has applications to register the word mark "Nichols" for ranges of goods in classes 29, 30, 32. The goods are various food and drink items such as might be supplied through vending machines. The applications were "bare" applications; that is to say they were unsupported by any evidence that the mark had acquired any distinctiveness by use. The appellants say such evidence is unnecessary, that the word "Nichols" should, without more, be registrable.
3. The United Kingdom Registry takes the view that the registration of names, and particularly of common surnames alone, should be considered carefully to ensure that unfair advantage is not given to the first applicant for such a name. It has a practice in relation to these, set out in a circular called PAC 6/00. This is annexed to this judgment. Broadly the position is that the commoner the name the less willing the Registry is to accept the application for registration without proof that it is has in fact become distinctive. The question also turns on the goods or services concerned - how many people having the name (or a similar name) might be affected by the registration is a material matter. Thus, in this case, an application in class 9 for vending machines was accepted without proof of use, the reasoning being that only a few people trade in such specialised goods. The Registry is particularly wary in the case of services commonly carried on by individuals. Thus, for instance, registration of "Smith" for "medical services", may well cause difficulty for many a Dr Smith or indeed Dr Schmidt. Ultimately this case poses the question of whether the registration of a common name as a trade mark is to be granted on a "first come first served" basis or whether there are wider, public interest, considerations involved.
4. Art. 2 of the Trade Marks Directive says that "a trade mark may consist of any sign … capable of distinguishing the goods or services of one undertaking from those of other undertakings."
5. Art. 3.1 then provides:

“1. The following shall not be registered, or if registered, shall be liable to be declared invalid:

(a) Signs which cannot constitute a trade mark;

(b) Trade marks which are devoid of any distinctive character;

(c) Trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, or the time of production of the goods or a rendering of the service, or other characteristics of the goods or service;

(d) Trade marks which consist exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade.”

…….

(g) Trade marks which are of such a nature as to deceive the public, for instance as to the nature, quality or geographic origin of the goods or service."

The Directive permits registration of a mark falling within paragraph 1(b), (c) or (d) if it is distinctive in fact. Article 3(3) says:

"A trade mark shall not be refused registration or be declared invalid in accordance with paragraph 1(b), (c) or (d) if, before the date of application for registration and following the use which has been made of it, it has acquired a distinctive character”.

The real question is whether a fairly common surname should be regarded as “devoid of any distinctive character” unless and until it has acquired a distinctive character following use.

6. The problem with a common surname particularly is that such a mark, until it has distinctiveness acquired by use, does not really indicate goods as coming from a particular undertaking. Until the mark is known and established, all that one can say is it indicates that the goods come from a member of a large class having that name. In the case of services the position is likely to be even sharper - any of a myriad of Dr Smith's could be the provider of a medical service.
7. Now this may not matter - after all even when first used the mark is some sort of indication of origin. The applicants may ask "what more would use establish?" The public would now recognise the name as a brand - but that is what they would do when they first saw the mark used. And they would be none the wiser as to which Nichols was actually the source. So use can make no real difference. A possible answer to this argument is this: that use showing the mark is regarded as a trade mark also shows that the mark has, by use, already foreclosed the position for others of the same or a similar name. In this connection it is worth remembering that laws of unfair competition, independently of rights given by trade mark registration, probably will protect a name which has become established as a trade mark.
8. It must also be borne mind that a registration confers a monopoly not merely of use of the word as registered for the goods or services of the registration. It extends to confusingly similar words and to similar goods (see Art. 5.(1)(b)). In the present case the registration would cover variants of the common surname Nichols, such as Nicholls and Nichol. There are nearly 500 listings under that name in the London telephone book alone. If the mark applied for had been Smith, then the problem would be all the larger - there are over 7000 of these in the same book.
9. The argument for the appellants necessarily accepts that it does not matter how common the name nor what the goods or services applied for may be. Smith for "medical services" by a completely unknown doctor would, if the applicants are right, be registrable if he were the first Smith to apply. The applicants point out with force that the items excluded from registration under Art.3.1 do not include surnames, common or not. In this respect surnames are different from geographical names, which are indeed specifically mentioned in both Art 3.1(c) and Art. 3.1(g).
10. If the appellants are right, it does not matter how wide the specification of goods or services of the application happens to be. This too is important, particularly in the case of registries that permit wide specifications without any requirement of a statement of intention to use over the range. Wide specifications are, I understand, permitted by OHIM, for example. It is all very well saying that the scope of registration can be challenged for non-use after a number of years. The reality of the difficulties of such challenges, involving both cost and delay, means that they are rare in practice. At best one has to wait until the mark has been on the register for 5 years before a non-use attack can even be started (see Art.10(1)). To that 5 year period one must add the period during which the application was under scrutiny - in practice often 2 years or more. It is important in my view in all trade mark matters to take a realistic approach to the way the registered trade marks system actually operates and is likely to operate rather than to look at the purely theoretical position.
11. It may be said that whether or not other parties are or should be free to use a mark before it has become distinctive in fact is irrelevant. The conflict between the public interest and the interests of the applicant is an inevitable feature of a registered trade mark system. Advocate-General Colomer has drawn attention to this conflict with considerable force in his opinion in the "Postkantoor TM", Case C-363/99 (paragraphs 53 to 61).
12. In this case an "own name" defence may be a relevant consideration. This depends on the Court's view of what is necessary for "distinctive character." I say this because, surprisingly to my mind, the Court in Baby-Dry, Case C-383/99P, had regard to potential defences in considering whether that mark, without proof of actual distinctiveness, was registrable. The case was under the Trade Marks Regulation 40/94 rather than the Directive but I do not suppose anyone contends that there could be any difference in relation to this point. The Court referred to Art. 7(1) (requirement that mark be not devoid of distinctive character) and Art. 12 of the Regulation (setting out defences) before it said:

"37. It is clear from those two provisions taken together that the purpose of the prohibition of registration of purely descriptive signs or indications as trade marks is, as both Procter & Gamble and the OHIM acknowledge, to prevent registration as trade marks of signs or indications which, because they are no different from the usual way of designating the relevant goods or services or their characteristics, could not fulfil the function of identifying the undertaking that markets them and are thus devoid of the distinctive character needed for that function."

13. I was surprised when the Court took into account the defence of descriptiveness. Traditionally that has not been the approach of the law, both in the UK, and, as I understand it, in many other European jurisdictions. An English judge put the policy position in graphic language many years ago:

“Wealthy traders are habitually eager to enclose part of the great common of the English language and to exclude the general public of the present day and of the future from access to the enclosure.” (Per Sir Herbert Cozens-Hardy, MR, in the “Perfection” case, (1909) RPC 837 at p.854)”.

14. The problem with saying "registration will not harm the public: if a third party wants to use the mark descriptively he has a defence" is this: that in the practical world powerful traders will naturally assert their rights even in marginal cases. By granting registration of a semi-descriptive or indeed a nearly-but-not-quite-completely descriptive mark one is placing a powerful weapon in powerful hands. Registration will require the public to look to its defences. With such words or phrases the line between trade mark and descriptive use is not always sharp. Moreover it must not be forgotten that the monopoly extends to confusingly similar marks. In any marginal case defendants, SMEs particularly, are likely to back off when they receive a letter before action. It is cheaper and more certain to do that than stand and fight, even if in principle they have a defence.
15. Baby-Dry has, if I have interpreted it right, shifted the balance towards trade mark owners who have the resources and foresight to use the registration system and against the public in general and weaker and less organised companies. It does seem to be somewhat in conflict with Chiemsee, Cases C-108 and 109/97 [1999] ETTM 585, as Advocate-General Colomer pointed out.
16. Turning back to this case, if it is proper to take into account the "own name" defence, then the Court may, in consequence, have to determine the extent of that. For the wider the potential defence, the less of an impost on the public the registration would be. The language of Art. 6.1 is as follows:

"The trade mark shall not entitle the proprietor to prohibit a third party from using, in the course of trade,

(a) his own name or address.

…..

provided he uses them in accordance with honest practices in industrial or commercial matters."

17. Important questions arise from this short provision:

(a) Does it apply to companies or is it limited to natural people? The House of Lords referred this point to the Court of Justice in Scandecor Development v Scandecor Marketing [2002] FSR 6. The House thought the better view was that the defence extended to companies. The case has now settled.

(b) What does "honest practices etc." mean? Does it extend to cases where the defendant thinks he is not causing actual confusion? Is a man who knows of the earlier registration but goes ahead in using name in the belief that there will be no commercial harm, safe? What if, when he starts using there is no confusion (perhaps because the trade mark owner has not yet started use), but confusion comes along later?

18. The Court may need to consider more generally how far defences are relevant to applications when considering distinctiveness. For there are some types of mark which others might legitimately wish to use which are not listed in Art.3.1 at all. The applicants point out surnames. There are others too - first names and initials come to mind at once.
19. In cases other than Baby Dry concerned with distinctiveness the Court has not referred to potential defences. It has emphasised however a need for a trade mark to identify goods or services as coming from a particular undertaking. Thus in Lloyds case, case C-342-97 [1999] ECR I-3819 at paragraph 22 the Court said:

“In determining the distinctive character of a mark … the national court must make an overall assessment of the greater or lesser capacity for the mark to identify the goods or services for which it is registered as coming from a particular undertaking, and thus to distinguish those goods or services from those of other undertakings” (emphasis added)

Again, in Philips' TM, Case C-299/99 18th June 2002, the Court said (para.65):

"extensive use of a sign which consists of the shape of the goods may be sufficient to give the sign a distinctive character for the purposes of Art3(3) of the Directive in circumstances where, as a result of that use, a substantial proportion of the relevant class of persons associates that shape with that trader and no other undertaking or believes that shape to come from that trader." (emphasis added)

20. These cases suggest, at least, that the question is whether a mark proposed for registration will do the job of distinguishing completely. How that is to be applied in the case of a common surname is the matter on which I seek the Court's assistance.
21. Although ultimately the questions to be referred are my questions, I will hear counsel as to their form before finally deciding upon them.