England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY

		12 November 2008

1. This is a claim for infringement of a Community Trade Mark ("CTM") and for passing-off between companies involved in the craft and hobby kit business. There is a counterclaim for a declaration of invalidity of the CTM. At this stage I am concerned with liability but not with damages.

Background

2. The Claimant Kitfix Swallow Group Limited ("KSG") is an independent manufacturer of craft and hobby kits which was started in 1962 by its current Managing Director Mr Stuart Marcus. KSG currently has 27 members of staff at its base in Swaffham, Norfolk most of whom are engaged in the manufacture and assembly of its range of products in the world of craft and hobby kits. The Defendant Great Gizmos Limited ("Great Gizmos") is one of the country's leading toy wholesalers and it specialises in activity and craft kits, games and puzzles. Great Gizmos has imported and sold a range of kits supplied to it by 4M Industrial Development Limited ("4M") of Hong Kong including the "Sequin Art" kit which has given rise to the action.
3. KSG has been selling products under the mark "Sequin Art" since it bought intellectual property rights and goodwill in the products from a company Impex, in 1990. The "Sequin Art" product allows the purchaser to create pictorial designs with sequins. The user places a velvet design onto a frame and attaches the sequins to create a finished picture. On 19 May 2004 KSG applied to the Office of Harmonisation in the Internal Market ("OHIM") under the Community Trade Mark Regulation No. 40/94 to register the word mark "Sequin Art" for "artistic materials, namely craft and hobby kits for making pictures" in Class 16. The application was registered on 9 August 2005 as 003850039 "Sequin Art" in the United Kingdom.
4. Sales of the "Sequin Art" product have been successful, according to KSG, rising from 84,400 in 2002 to 167,328 in 2007. From January 2004 Great Gizmos started to import for sale in this country a "Sequin Art" product from the 4M Fantasy Rainbow range and continued to sell this kit until March 2007. There were sales of some 20,000 units at a sales value of about £35,000. The Great Gizmos kit came to the attention of KSG in late 2006 when Mr Marcus's wife saw the product while shopping in John Lewis. KSG complained to Great Gizmos who decided, it says for commercial reasons as the 4M "Sequin Art" product was of minor importance, to place no further orders for it with 4M. KSG pursued the matter however and this action was brought in January 2007. On 28 August 2007 4M applied to OHIM for a declaration of invalidity of the Mark on grounds which included those relied on by Great Gizmos in this action. In November 2007 Mr Justice Mann refused an application by Great Gizmos to stay this action in favour of the OHIM proceedings. As a result those are now stayed until the outcome of the counterclaim in this action.
5. The action was tried over a busy three days between 10 and 12 June. I heard six witnesses for the Claimant, Mr Marcus who as I have mentioned is the KSG Managing Director, Mr Ian Bleasdale, a retired buyer from a catalogue company, Mr Rodney Jenner, the Purchasing Manager and joint owner of a trade wholesaler, Mr Suleyman Necati, who owns two shops and also does on-line sales, Mr Kevin Franklin who runs an art craft and hobby store and Mr Andrew Haddock who runs a shop and mail order business in Leeds. I heard nine witnesses for the Defendant: Mr Ian Dayus Managing Director of Great Gizmos, Mr Michael Green who runs an art and craft e-commerce business, Mr Peter Brown, Chief Executive of Flair a major toy company and former Chairman and President of the British Toy and Hobby Association, Mr Tom Bailey who runs an on-line mail order company including a "Pinflair" line of kits, introduced by his wife, Ms Deborah Hartfield who owns and runs a chain of independent toy shops, Ms Stephanie Shaw, an author and television presenter in the field of crafts on a shopping channel, Ms Kim Kramer, a mother with two children, Ms Sandra Lovell a retired lecturer and child care playgroup supervisor and Ms Anne-Marie Noon until recently a buyer within John Lewis' toy department. The three day estimate for trial was very unrealistic and hearings of an additional half day and a further hour were fixed for closing submissions. Unfortunately none of the days offered by the court was convenient to the parties until the last on 21 July. A draft judgment was circulated on 1 October but today is the first date convenient to both Counsel. Judgment is therefore delivered later than I would have wished.

Legal framework - Infringement

6. I first need to set the legal framework to identify which facts are relevant. The right of a proprietor of a CTM to take infringement action is set out in Article 9 of the Community Trade Mark Regulation No. 40/94 ("The Regulation") relevant passages of which read as follows:

"1. A Community trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade:

(a) any sign which is identical with the Community trade mark in relation to goods or services which are identical with those for which the Community trade mark is registered;

(b) any sign where, because of its identity with or similarity to the Community trade mark and the sign, there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes the likelihood of association between the sign and the trade mark.

3. The rights conferred by a Community trade mark shall prevail against third parties from the date of publication of registration of the trade mark. Reasonable compensation may, however, be claimed in respect of matters arising after the date of publication of a Community trade mark application, which matters would, after publication of the registration of the trade mark, be prohibited by virtue of that publication. The court seized of the case may not decide upon the merits of the case until the registration has been published."

7. Article 12 provides in relevant part:-

"A Community 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;

(b) indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of the goods or of rendering of the service, or other characteristics of the goods or service;

(c) the trade mark where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts,

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

8. I also gratefully borrow two paragraphs from the headnote to the decision of Kitchin J in Julius Samaan –v- Tetrosyl [2006] EWHC 529 as they summarise sufficiently for the purposes of this case considerations of some complexity.

"To constitute infringement, the offending use had to be such as to affect or be liable to affect the functions of the trade mark, and in particular its essential function of guaranteeing to consumers the origin of the goods. This would be the case, in particular, where the use complained of was such as to create the impression that there was a material link in the course of trade between the goods and the undertaking from which they originated. The question was whether consumers, including consumers confronted with goods after they had left the point of sale, were likely to interpret the sign as designating or tending to designate the undertaking from which they originated…"

"The court had to consider the likelihood of confusion arising from the use by the defendant of the offending sign, discounting added matter or circumstances. If the sign and the mark were confusingly similar, then the defendant could not escape by showing that by something outside the actual mark itself he had distinguished his goods from the proprietor." [52]

9. KSG says that the CTM is registered as a plain word mark so its scope of protection includes the graphical representation of the words "Sequin Art" and that as a result the Great Gizmos kit is identical as it uses the same words albeit in stylised script. The two kits are identical goods and it follows that there is an infringement under article 9(1)(a). That being the case there is no need for KSG to establish a likelihood of confusion.
10. Great Gizmos says that it has a good defence because the words "Sequin Art" are descriptive of the kits. Great Gizmos does not dispute that the words complained of are the same as the Claimant's Mark or that its goods fall within the scope of KSG's registration. But Great Gizmos contends that there is no infringement unless the use complained of is likely to interfere with the capacity of the mark to serve as a guarantee of origin and thereby affect the specific subject matter of the registered right – see the test for infringement set out in Celine Sarl v Celine SA [2007] ETMR 80. Great Gizmos says that the words used are likely to be perceived as describing the product to which they have been applied, but do not indicate the source or origin. It also relies on the branding of the product being "4M" in contrast to the KSG "KSG" multi-coloured device trade mark.
11. KSG has an alternative case that if the Great Gizmos sign is not identical to the CTM then it must be considered similar and there is therefore an infringement under article 9(1)(b). It is common ground that the relevant principles as to the existence of the likelihood of confusion in the CTM context were recently and accurately set out by Warren J in Rousselon Frères et Cie v Horwood Homewares Ltd [2008] EWCH 881 (Ch), 24^th April 2008 at S13 (the "Sabatier" case):

"13. In paragraph 61 of the Decision, Mr Foley sets out (in a way which is standard in decisions of this sort) the guidance which he derives from the case law of the ECJ in Sabel BV v Puma AG [1998] RPC 199, Canon Kabushiki Kaisha v Metro-Goldwyn-May Inc [1999] RPC 117, Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV [2000] 45 FSR 77 and Marca Mode CV v Adidas AG & Adidas Benelux BV [2000] ETMR 723. He then sets out the conclusions to be drawn from that case law: I do not think that there is anything contentious about his conclusions so far as they go which are to the following effect:

(a) the likelihood of confusion must be appreciated globally, taking account of all relevant actors; Sabel BV v Puma AG,

(b) the matter must be judged through the eyes of the average consumer of the goods/services in question; Sabel BV v Puma AG, who is deemed to be reasonably well informed and reasonably circumspect and observant – but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind; Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV,

(c) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details; Sabel BV v Puma AG,

(d) the visual, aural and conceptual similarities of the marks must therefore be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components; Sabel BV v Puma AG,

(e) a lesser degree of similarity between the marks may be offset by a greater degree of similarity between the goods, and vice versa; Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc,

(f) there is a greater likelihood of confusion where the earlier trade mark has a highly distinctive character, either per se or because of the use that has been made of it; Sabel BV v Puma AG,

(g) in determining whether similarity between the goods or services covered by two trade marks is sufficient to give rise to the likelihood of confusion, the distinctive character and reputation of the earlier mark must be taken into account; Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc,

(h) mere association, in the sense that the later mark brings the earlier mark to mind, is not sufficient for the purposes of Section 5(2); Sabel BV v Puma AG,

(i) further, the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense; Marca Mode CV v Adidas AG & Adidas Benelux BV,

(j) but if the association between the marks causes the public to wrongly believe that the respective goods come from the same or economically linked undertakings, there is a likelihood of confusion within the meaning of the section; Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc.

14. From these cases, one can see that non-origin confusion is not enough to establish a likelihood of confusion; rather, there has to be a likelihood of confusion about the origin of the goods or services".

12. KSG contends applying these principles that the goods are identical, the sign is aurally and conceptually identical to the mark, the mark is distinctive in itself or due to the fact that it has been used extensively for many years and the only slight point of difference, on the alternative case, is that the signs are merely similar visually but not identical. KSG says therefore that there exists a likelihood of confusion on behalf of the relevant company. As regards Article 9(1)(b) Great Gizmos says that there is no sufficient evidence of a likelihood of confusion as to source or origin emphasising the duration of the use of the words "Sequin Art" with apparent lack of confusion.
13. Great Gizmos also relies upon Article 12 which provides a defence where a Defendant has used indications concerning the "kind, quality, … intended purpose … or other characteristics provided that such indications have been used with honest practices in industrial or commercial matters". Great Gizmos says that that is precisely what their use of "Sequin Art" has been. It seems common ground that the expression "honest practices in industrial or commercial matters" connotes a duty to act fairly in relation to the legitimate interests of the trade mark owner. This is it seems in essence the same question as whether or not there has been a passing-off.

Legal framework - Validity

14. Great Gizmos claims that the registration of the CTM in dispute is invalid as, it claims, the mark lacks any distinctive character and has not acquired this through use.
15. Great Gizmos contends as follows. In both 2004 and 2005 in the ordinary language of the relevant field of activity, the words "Sequin Art" were such as to be likely to have been perceived by the relevant trade and/or public as describing the goods in issue and that, as such, they were lacking in any capacity to distinguish and, further, that they have done so at all material times. They immediately inform the average consumer that the goods in issue are used to create art or artwork using sequins. There is no lexical invention or any unusual syntactical structure to the term "Sequin Art". The words are a natural description for the goods which the parties sell and are and have throughout been used in this way.
16. By Article 7(1)(b) and (c) of the Regulation, trade marks which are devoid of any distinctive character and/or consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, intended purpose, value, geographical origin or time of production or of rendering the service, or other characteristics of the goods or services shall not be registered. This is the case regardless of whether those grounds apply in the whole or only in part of the Community.
17. By Article 51(1)(a) a CTM shall be declared invalid on the basis of a counterclaim in infringement proceedings where the CTM has been registered contrary to the provisions of Article 7. By Article 7(3), the mark may nevertheless not be declared invalid if, in consequence of the use which has been made of it, it has after registration acquired a distinctive character in relation to goods or services for which it is registered. If and in so far as a mark is declared invalid, it is deemed not to have had effect from the outset.
18. By Article 95(1), the Community trade mark courts are to treat the Community trade mark as valid unless its validity (as has been the case in this action) is put in issue by the Defendant with a counterclaim for revocation or for a declaration of invalidity. Thus, once validity has been challenged, it is no longer presumed. The initial burden of raising invalidity rests with the Defendant, the burden of establishing any case of acquired distinctiveness after the date of registration lies thereafter upon the proprietor of the CTM.
19. KSG accepts the legal principle but rejects their application to the facts by Great Gizmos. KSG contends that a mark does not offend against Article 7(1)(b) or (c) merely because it is allusive of a characteristic of those goods. In this case, the term that would be descriptive of the goods in question would be "components for sequin pictures". However, the use of the word "art" is too vague to allow the CTM "Sequin Art" to be descriptive of the goods themselves. Rather, it alludes to what the finished product might wish to be considered. The goods themselves are not pictures. The goods merely comprise some sequins and instructions, i.e. nothing more than a collection of plastic bags that contain components that might form a picture in due course if suitable skill and endeavour is expended by some-one. KSG says that the mark is not only inherently distinctive but that this distinctiveness has been enhanced by the use referred to in the evidence.

Legal framework – Passing Off

20. The relevant principles of passing-off are not in dispute. In order to succeed a Claimant must first establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the relevant 'get up', secondly demonstrate a misrepresentation by the Defendant to the public leading or likely to lead it to believe that the Defendant's goods or services are those of the Claimant and thirdly he must show that he has or is likely to suffer damage. Damage will be readily assumed. In practice the considerations for passing-off are the same as for infringement except that the former involves surrounding circumstances such as overall packaging and the use of the companies/logos.

Further facts agreed or not greatly in dispute

21. A fair representation and summary of the use of "Sequin Art" by the parties is found in the photograph at 1752 in the bundles showing the KSG kit as it appears on the shelves in a box and the Great Gizmos kit as it appears in a blister pack. The KSG "Sequin Art" product is marked with the KSG multi-coloured device on the front and the side but is about one-eighth the size of the "Sequin Art" mark on the front. The KSG product contains a warning that adult supervision is recommended when it is used by children because it contains sequins which are fixed to a board with pins. The Great Gizmos product is cheaper and has a pre-cut and pre-prepared sticky board to which sequins are simply stuck making it suitable for unsupervised use by younger children. The Great Gizmos product states "easy-to-do fun "Sequin Art". Just peel and put on the colourful sequins and create your very own sequin picture".
22. Great Gizmos says that it introduced a "Sequin Art" product based on earlier "sand art" products which applied the same sticky board concept but with coloured sand. 4M's "Sequin Art" was intended as a companion product to "sand art". 4M manufactures other craft products including "thread art", "crochet art", "mosaic art", "straw art" and "spin art". Great Gizmos says that "Sequin Art" was selected as a name because it described the product and was consistent with other product lines. There is no evidence that any manufacturer in the UK or EU other than KSG has used the term "Sequin Art" at any relevant time to any material extent. Pinflair the only UK company producing similar products, albeit on a small scale, uses the term "sequin pictures" although it may have used "Sequin Art" in the past. A US company Herrschners may have used the mark in the UK for a short period but desisted apparently after being warned off by KSG. "Sequin Art" has been used in the United States as evidence from websites showed. There may have been limited use of Fun-Tastic and Anchor products quite recently but the scale of use seems very limited.
23. The term "Sequin Art" is thus used on websites. Mr Green gave evidence of first selling KSG products and then adding the Pinflair range. Mr Bailey also used the term following his wife's adoption of it.
24. It is not in doubt that manufacturers and distributors of products in this field frequently use the terms that Mr Edenborough, Counsel for KSG calls "X-Art", X being "sand", "glitter" and so on. But KSG and more recently Great Gizmos appear to be the only ones to have used "Sequin Art", to any extent in the UK.
25. Products in this area are known as "art kits" or "craft kits" or by similar descriptions. These and similar expressions were used by witnesses such as Mr Dayus, Ms Hartfield, Ms Shaw, Ms Noon, Mr Marcus and Mr Necati. It is clear that there is no one term of art identifying all these products as "art kits".
26. Both products can be identified not only by "Sequin Art" but also by the manufacturer's mark KSG or 4M. The evidence of Mr Green, Ms Hartfield and Ms Kramer indicates that retail and also perhaps wholesale customers identify with the product rather than the manufacturer's name.
27. The fact that the 4M product uses glue rather than pins to affix the sequins thus directed at a younger child market points to at least two potential conclusions. One is that this difference differentiates Great Gizmos from KSG thus reducing the risk of confusion. Another possibility is that products addressed to younger children may be seen as "feeder" products for older ones and as a part of one wide range. These matters were canvassed with Mr Dayus, Mr Green, Ms Noon and Ms Hartfield. Considerations emerging from evidence were that children might have forgotten about the first product by the time they advanced to the second but that if parents were the purchasers their memories might last longer so as to form the link. Differences in price and in the style of pictures ventilated for example with Ms Shaw can also be seen in different ways. The fact that one product would not be cross-sold for the other would assist Great Gizmos in showing the absence of the likelihood of confusion. But if seen as coming from a common trade source there would still be confusion even if one product would not be mistaken for the other.
28. There is no evidence of actual confusion between the two products. Indeed as I have pointed out the Great Gizmos product came to the attention of KSG only when the wife of its Managing Director saw it at John Lewis.
29. Ms Clark, Counsel for Great Gizmos, fairly summarises the market for kits as follows "They are marketed to the trade at national and international trade fairs and promoted primarily through catalogues. Trade customers advertise or promote such goods through their own catalogues or other advertising or on their websites". KSG also advertised directly to the end consumer in local papers and in 2006 and 2007 on some cable and other subscription television channels. Ms Clark also produces, collated from the evidence, a long list of other kits on the market which had names including the word "art" preceded by an indication of the craft skill to be employed, the material to be used and/or the name of a particular article. She also suggests that the evidence indicates that customers for kits or their parents are going to be interested in the nature of the activity involved, the look of the end product and whether its suitability for the "crafter" or artist for whom it is intended (in terms of age, sex and other factors). This suggests that the degree of attention likely to be paid to the packaging prior to sale will be higher than in relation to everyday consumer items. She also suggests that the evidence indicates that members of the trade are likely to be alert to the fact that the same or similar descriptors are used by manufacturers.

Trade evidence

30. Both sides emphasised that while trade evidence was important opinions from witnesses were irrelevant and inadmissible as there was no expert testimony. That is not through omission on the part of either party but because expert evidence is inadmissible in this context unless the experience which the judge must be taken to possess as an ordinary shopper would not be sufficient to enable him to assess such issues as well as any other (see Kerly's Law of Trade Marks and Trade Names 14^th Edition) at 17.063-069. This leaves evidence from traders to cover matters within their own knowledge such as whether they were themselves confused, the reactions of customers and their views about stocking both parties' goods at the same time. These witnesses also give evidence about the trade background which I have already mentioned. Although Counsel agreed that these limitations on admissibility applied most witnesses cheerfully departed from them.
31. KSG called five trade witnesses. Mr Bleasdale was a former buyer who until he retired in 2006 worked for Express Gifts a large company involved in home shopping through a catalogue and on the Internet. To him "Sequin Art" was synonymous with KSG and no-one else and both product and company had a high reputation. Mr Jenner runs a wholesale warehouse, the House of Handicrafts where he has worked for 27 years. He too associates "Sequin Art" only with KSG and he testified to the high reputation of the product and the brand. Mr Franklyn owns an art craft and hobby store in Southend on Sea. His store is of moderate size and is next to a large competitor but it has been established for over 60 years. Mr Franklyn too identifies "Sequin Art" only with KSG, has a high regard for the company and the product and had never heard of the Great Gizmos product before this litigation.
32. Mr Haddock is the Director of Craftwise which runs a retail craft and hobby business through a shop in the Merrion Centre in Leeds. He has a similar view of KSG and its product to the other trade witnesses. He has seen the Defendants' "Sequin Art" at trade shows and in the Great Gizmos catalogue. He has also been aware of a product made by Pinflair without knowing under what name it was marketed. However he, and his customers, associate "Sequin Art" with KSG and no-one else. This is partly as a result of the advertising and other promotion of "Sequin Art" by KSG. "Sequin Art" was his company's top selling line in 2007. When he saw the Great Gizmos "Sequin Art" product he was initially under the impression that it was from KSG.
33. These witnesses all readily accepted in cross-examination that they were good customers of the Claimant and friendly towards Mr Marcus. All were frank and straightforward. I am sure that they were giving a truthful account of the market and its product as they saw them. Mr Necati of Crafty Arts, an arts and crafts retailer with two shops, one in Brentwood and the other at the Bluewater shopping centre, and an on-line sales business, has been selling KSG products for about 15 years. Mr Necati has a high opinion of the "Sequin Art" product and its brand and his evidence was that his customers automatically thought of the Claimant's product when the expression "Sequin Art" was used. Mr Necati's evidence was well meant but its force was weakened by his reluctance to disclose the extent of his dealings in Great Gizmos product and an apparent lack of frankness about this. I have no doubt that Mr Necati is an honest and straightforward person but he seemed to me to be motivated by loyalty to his good friend Mr Marcus. I place little weight on his evidence particularly as like that of other witnesses in this area, it is necessarily somewhat nebulous and difficult to test.
34. The Defendant also called trade evidence. Mr Green trades from Tamworth as "e-pastimes" in the art and craft trade and from 1987 until 2005 he and his wife ran an art and craft shop. He has also worked in private practice as a solicitor. He gave his opinion as to why KSG names such as "Sequin Art", ""3D Sequins" and "Sequin Art and Beads"" are entirely descriptive and generic. He described the Great Gizmos products as "entirely different" stating that it is "obvious to a prospective customer" from various features distinguishing the product that the kits "are as different as chalk and cheese, made by different people". He also produced an additional witness statement putting forward evidence of what he considered are actions by KSG using concepts and ideas taken from 4M and from others. Mr Bailey runs Monochrome Solutions based in Merseyside which is an on-line mail order business supplying, amongst other things, art and craft products. He produced printouts from his eBay shop "Monochrome Crafts" selling Pinflair kits under categories including "Pinflair "Sequin Art"". In his experience and that of his customers the Pinflair kits "are" "Sequin Art". The kits let you make "art" from or with sequins. "Sequin Art" just describes the Pinflair kit. Mr Bailey, irrelevantly for the purposes of this action, explained that he cannot believe that someone can claim a monopoly over the words "Sequin Art". Ms Hartfield owns and manages a chain of independent toy shops named Kids Stuff in the South East with wide and extensive experience. Both the KSG and the Great Gizmos "Sequin Art" products have been sold in Ms Hartfield's shops. She had no qualms about stocking both products together. So far as she was concerned they were both simply craft products, two activity kits to make pictures from sequins. She has no recollection of any customer ever querying whether the products came from the same source. She is unaware of any customer returning a "Sequin Art" product saying that it was not what they had intended to buy. She refers to what she describes as a naming formula a reference to what I have described earlier as "X art" and gives examples. She too expresses the view that "Sequin Art" is a generic name for a craft or activity kit which contains the materials and instructions to make a piece of art from sequins. Ms Hartfield, unlike Mr Green and Mr Bailey has been a customer of Great Gizmos, but like the other trade witnesses, was clearly telling the truth as she saw it. Mrs Shaw works as an author and television presenter on a shopping channel in the field of crafts. She gave evidence of her understanding of the words "Sequin Art" as referring to a craft technique and a category of kits. Mrs Shaw described the growth in interest in crafts and the many kits now available. She too referred to "Sequin Art" as being a generic term. She was aware of Pinflair having kits which contain the materials necessary to create a piece of "Sequin Art" and has described these on television as "Sequin Art". She expresses the view that it is understandable that both kits should carry the "Sequin Art" name. She does not understand why KSG objects to the Great Gizmos product.
35. Mr Brown is Chief Executive of Flair Leisure Products. He was Chairman of the British Toy and Hobby Association from 1994 to 1996 and its President from 2003 to 2007. Mr Brown compared KSG "a company with a limited distribution … that is not particularly well-known or recognised in the industry" unfavourably with Great Gizmos "a much newer, vibrant business which I first came to know around 7 or 8 years ago". He described Great Gizmos as being at a similar stage of development to his own dealing in similar products and run by a management team with attitudes similar to his. He refers to there being literally thousands of creative play products and to the need therefore to describe them to consumers and traders by reference of their functionality. He refers to a number of manufacturers using as a name of their product words which combine a description of an art and craft material with the word "art". His own company Flair uses the descriptions sand art, glitter art and "Sequin Art" to describe creative play. He also referred, in addition to Flair to Alex Toys, Grafix and AMAV as producing sand art products. Mr Brown's disparagement of a British manufacturer was unexpected given his position in the trade association. It is surprising that Mr Brown referred to his own company using the description "Sequin Art" to describe a creative play item in his witness statement when Flair had never used the term "Sequin Art" in relation to its products. I was left with the impression of Mr Brown, as is sometimes the case with senior people, having given too little attention to the preparation of his evidence.
36. Great Gizmos also called as witnesses two members of the public who had apparently been approached in the street, one rainy afternoon in Chiswick, by the Defendant's solicitors. Both witnesses were obviously truthful but understandably a little bemused by the process. Mrs Kramer said that the words "Sequin Art" would she assumed "involve young girls sticking sequins to some sort of background such as pictures, T-shirts or Styrofoam shapes". She observed that sequins are most commonly known for their use to decorate clothing from couture to casual. She had bought several craft or hobby kits over the years for her children but had never seen a kit called "Sequin Art". Mrs Kramer had heard of both KSG and 4M. She was of the view, when she saw the kits that "Sequin Art" was what she imagined, an art form. She expressed views that one company should not try to claim a right in words which describe a product believing that no-one should be allowed to register a name saying what the product is. Mrs Lovell, a retired lecturer and a grandmother said that when asked what the words "Sequin Art" meant to her her reaction was that they meant nothing at all. She then said that a craft or hobby kit called "Sequin Art" would suggest to her a kit for making art or pictures out of sequins. She said that after being shown the kits it was clear to her that "Sequin Art" was indeed a kit for making pictures out of sequins. The two words are not a play on words but describe the product just like "chicken curry".
37. At the end of May the Defendants put in evidence from Ms Anne-Marie Noon who now works as a manager for Flair, Mr Brown's company. She had worked for John Lewis for many years until 2007 where for her last 4 years she was a buyer in the toy department, one of three responsible for all 32 stores across the UK. In her first witness statement she said that she was aware of the KSG kit having ordered it in July 2005 for sale later that year and into the following summer. She said that John Lewis stopped selling KSG "Sequin Art" because it was a poor seller which looked dated and old fashioned. Ms Noon would have stopped selling the KSG product regardless of 4M. In the summer of 2006 Ms Noon saw the 4M "Sequin Art" kit and thought it was a "great product" with a modern and trendy feel appealing to the young. Ms Noon accordingly rejects Mr Marcus' belief that John Lewis was confused between the products. Ms Noon put in a second witness statement to clarify the first. When she was cross-examined it emerged that she was mistaken in recollecting that the 4M product was still stocked while she was still at John Lewis. She also had no explanation as to how it came about, despite her firm initial views to the contrary, that John Lewis did in fact re-order the KSG product. Ms Noon put this down to human error by the merchandising department going off at a tangent. It was understandable that Ms Noon might not now recollect the detail of the dealings between the two parties to this action and John Lewis. But what had started as evidence that Mr Marcus' belief of confusion was mistaken ended as testimony that there may well have been confusion between the ranges.

Other witnesses of fact

38. Mr Stuart Marcus the Managing Director of KSG gave evidence of the background and development of his manufacturing business over 46 years, starting with a dolls house kit which he sold from the back of a Lambretta scooter. Although the Defendant criticises the quality of evidence available about sales volumes it seems clear that kits were selling at a good level before 2002 when they reached some 85,000 rising to 167,000 last year. Mr Marcus described the advertising and promotion of this product including a dedicated website for the "Sequin Art" product. Mr Marcus says that the very extensive promotion through a marketing company using magazines, newspapers and television has made the Claimant synonymous with "Sequin Art". Steps to prevent others from selling products under the "Sequin Art" name have invariably been successful. Criticisms were made of the data produced by Mr Marcus to show past sales levels and amounts spent on promotion. Although these were fair questions they would have carried greater force when addressed to an executive of a much larger and more sophisticated company engaged in litigation about much higher sums. The quality of historical data available to KSG is typical of businesses of that size.
39. Mr Marcus accepted in cross-examination that kits in this case all involve the use of "art material" but contended that the end product is not "art" in the sense that the "artist" is engaged on a work which is pre-determined. It was pointed out to Mr Marcus that there were many examples, notably in the impressive scrap books which he himself has carefully maintained over the years, of "art" being used in the context of these kits.
40. Mr Ian Dayus Managing Director of Great Gizmos made three witness statements and gave evidence. Mr Dayus has extensive experience in the greeting card and toy and gift industries. In September 1997 he started Great Gizmos Limited directed at the arts and crafts sector of the toy market. He developed a range of products sourced from and manufactured in China including Metallic as well as Sand Art products. Turnover has increased from some £113,000 in the first year to some £3.8 million last year. As part of the range Great Gizmos imports kits based on the concept of fixing arts and craft materials to boards. In October 2003 4M showed Mr Dayus a new product range "Fantasy Rainbow – Sequin Art". The product was ordered in November 2003, 6 months before KSG's community trade mark application. There was controversy in cross-examination about the exact date when the 4M kits were sold but broadly some 20,000 units at a sales value of £35,000 were sold between February 2004 and March 2007.
41. Mr Dayus was unaware of KSG or its products until he received a solicitor's letter in December 2006. A commercial decision was taken to avoid a legal dispute given the minor importance of the 4M "Sequin Art" product to the Great Gizmos range as a whole and the low volume of sales. Like Mr Marcus Mr Dayus put forward his own views of the meaning of "Sequin Art". Mr Dayus produced the results of internet searches but some of these gave what is no doubt an unintentionally misleading impression. For example the "Dora the Explorer" and "Care Bears Sequin Art" products were taken from the relevant .com site relating to the US market rather than from the .co.uk site. There are other examples of inaccuracy and imprecision, identified in Mr Edenborough's closing submissions, which indicate that Mr Dayus did not perhaps take sufficient time to study the detail. While these indicate a lack of reliability as regards the points of detail I do not accept Mr Edenborough's submissions that Mr Dayus was dishonest or seeking to mislead the court. It seemed to me that, like Mr Marcus, he has developed very strong views about the issues in this case.
42. Finally the Defendant relies upon a witness statement of Mr Chu Chi Keung the founder and sole Director of 4M. The witness explains the background to the development of 4M and its history and the development of what are apparently a number of products in the format of "X-art". He gives 15 examples of which one is "Sequin Art" developed in 2004 from an idea which came to his mind in early 2003. He emphasises that this was an original development and that he had never heard of KSG. Mr Edenborough chose not to cross-examine this witness on video link but I do not accept that the evidence is to be treated as unchallenged. Counsel's decision was appropriate in the context of a three day trial where the Defendant had cross-examined six witnesses of the Claimant over two days. While I do not accept criticism of Miss Clark's questioning this left only a short time for the Claimant to cross-examine nine witnesses of the Defendant. Mr Chu Chi Keung's evidence is not therefore to be treated as unchallenged but while helpful background it adds little relevant to the legal issues I have to decide.

Submissions of the parties – general

43. Although the amount at stake in this case is, or is at least likely to be, low it has been fiercely contested. I have referred to the OHIM proceedings and to the hearing before Mr Justice Mann. The trial has involved consideration of twelve files of documents and four bundles of authorities. Counsel have touched on a range of complex legal issues some of which may be of more interest to the specialist practitioner than of direct relevance to the facts in this case. I therefore consider the case which has been pleaded and do not deal with some other potential issues floated in argument. Some of the points of law fall away because of the facts I have found, others like the many possible permutations concerned with dates do not arise because I perceive, on the evidence available, very little or no distinction between the position at different points other than the obvious. Other points of law were developed only because I asked questions or counsel helpfully sought to provide me with material which a specialist judge in trade marks would know intuitively.

Conclusions on the facts

44. The Great Gizmos sign is in a different script to that of the Mark but is otherwise identical. The 4M kit is identical to those for which the CTM is registered. The CTM is a plain word mark which protects any graphical representation of those words so, subject to other defences, there is infringement under Article 9(1)(a). It is however still necessary to consider the likelihood of confusion given the claims in passing off, the Defence under Article 12 and the claim under Article 9(1) (b) if I am wrong about (a).
45. I also have to consider whether the CTM is devoid of distinctive character under Article 7(1)(b) because of the allegedly descriptive character of the mark or is caught for much the same reasons by Article 7(1)(c). I have already referred to this concept.To have distinctive character a mark must enable the public concerned to distinguish the product from others which have another commercial origin and to conclude that all the goods bearing it have originated under the control of the proprietor of the trade mark to whom responsibility for their quality can be attributed. See Philips Electronics-v-Remington [2003] RPC 2, [35], [47]. I have to assess the likely impact of the words 'Sequin Art' upon the notional 'average consumer' at the relevant date or dates. I bear in mind the guidance in Bach Flower Remedies [2000] RPC 513 at 535. (These considerations are also identified in Julius Samaan).
46. Evaluating the background, the undisputed matters I have identified and having regard to the witness evidence I reach the following conclusions.
47. Much of the evidence about the two central and linked issues from one party was cancelled out by the other party's witnesses. Other evidence, where admissible, was difficult to evaluate. An assessment of the standing or qualities of a manufacturer or a product is to an extent subjective and difficult to test. The process is made harder when as here witnesses come to a case with strong views about who is in the right or about a wider issue such as the morality of there being a potential exclusive right to use a name. This and other evidence was also coloured by the understandable tendency of the solicitors taking statements to begin from a particular standpoint. Evidence from two members of the public was equivocal following cross examination and inevitably not representative. Other trade evidence was also somewhat subjective, based on a limited knowledge of the market as a whole which can seem different to those who work in separate but closely related segments of it. Another difficulty is that the dispute is highly charged with both sides' leaders having very strong views which affected their evidence.
48. "Sequin Art" is a mark used by KSG for some years on its "Sequin Art" kits. The kits have built up significant sales in a corner of the craft market by marketing and promotion and by the attraction of the product. It is clear that stockists of "Sequin Art", such as the Claimant's witnesses see the mark as valuable for their trade and identifiable amongst the many other 'X-Art' products on the market. Other stockists less drawn to the KSG product take a different view. Although stockists will usually be well aware that the two "Sequin Art" products come from different manufacturers (but not always, as the John Lewis example shows) I doubt that purchasers will. The differences in packaging and in the craft skill required seem to me more to suggest that the products are for different age groups than that they come from different sources. The size of the manufacturers' logos on both products is small and not prominent and I would not expect a child or parent to pay much if any attention to that. They are both sold by the name of the product not that of the manufacturer. My own first impression albeit superficial (perhaps like that of a purchaser) was that these products of the same name and nature were part of the same range.
49. There is no hard evidence of confusion being caused. Although the John Lewis evidence as it turned out did not assist the Defendant the facts were not as Mr Marcus assumed them to be. Evidence from honest witnesses that they could not rule something out or that it could not be discounted for certain, relied on for different purposes by both sides, does not assist Mr Edenborough at this point. But one would not expect with low cost items that instances of confusion would be reported or often be the subject of complaint. Although confusion might not happen very often I consider that there is certainly a likelihood that it would given the background, the similarities between the products, the nature of the market and the fact that both kits are called "Sequin Art".
50. In a case of this modest size and where the evidence is limited I find it purposeless and not practicable to draw distinctions between the position at different times between 2004 and 2007. In short I conclude that the use by Great Gizmos of "Sequin Art" was such as to constitute infringement.
51. I also conclude from the evidence that the mark "Sequin Art" is distinctive either inherently or because of its use over the years, essentially for the reasons given by Mr Edenborough. Ms Clark rightly observes that drawing a distinction between what is descriptive and what is allusive is all very well but it depends where the boundary is drawn. "Sequin Art" is used by KSG as the name of the product. No one else in the UK or the EU has done this to a material degree. Some have stopped for what may be commercial not legal reasons after being warned off by KSG. But this left the field to KSG until Great Gizmos arrived. "Sequin Art" is allusive not descriptive, (unlike Mrs Lovell's example of chicken curry) because while it indicates the nature of the product it does not describe it. Further use over the years has made it distinctive.

Conclusion

52. It therefore follows that there is infringement of this mark and that the challenge to its validity fails. The defence under Article 12 fails because of what seems to me to be the inexorable conclusion that there has been passing off. It has not been seriously suggested that a finding of passing off would not follow from one of infringement. There are in this case no features which would lead to a different conclusion.
53. I am concerned with liability not damage but I should draw attention to the fact that I have found there to be no more than the likelihood of confusion in a context where Great Gizmos' total sales of "Sequin Art" did not exceed £35,000 and when it chose to cease sales altogether. It is regrettable that a dispute of such limited financial value needed to be taken through the expensive and formidably complex forum of a trade mark action. Miss Clark's opening skeleton identified, no doubt correctly, no less than eleven issues for decision some of which raise highly complex sub issues. I have tried to stick to the central issues given the small scale of the questions in dispute. In doing so I may have overlooked matters which the parties wish to be decided. If so I will deal with these and other consequential matters when handing down judgment. I shall be grateful if corrections of the usual kind, a draft order and a note of other matters to be addressed can be sent to me at least forty eight hours before the handing down.
54. I am most grateful to Counsel and solicitors, all experts in this field, for their considerable and able assistance.