Intellectual Property Enterprise Court

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
INTELLECTUAL PROPERTY ENTERPRISE COURT

		Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL
		10/11/2015

Judge Hacon :

1. The Second Defendant ("Mr Jonasson") has devised or possibly has copied a lucrative business model. He ran it through his company, the First Defendant ("IPAL"), of which he is sole director and shareholder.
2. IPAL wrote to proprietors of patents and trade marks reminding them that the right required renewal, requesting a fee for the renewal. The official fee to renew a trade mark through the United Kingdom Intellectual Property Office ("the IPO") is £200. IPAL charged a minimum of £1,280. Renewal fees for patents are more complex but by way of examples on one occasion IPAL charged £3,700 when the official fee was £850; on another occasion IPAL charged £11,520 whereas the IPO would have charged £2,250. In each case IPAL did renew the relevant rights on behalf of the paying rightholder, or at least tried to. Out of 946 applications by IPAL to the IPO to renew rights, 832 succeeded; 114 did not because the right owner had renewed the right already. It seems that IPAL has made a gross profit of £1.1 million from its business.
3. Charging owners of IP rights outrageous sums of money to do something they could easily and at much lower cost do themselves is not of itself unlawful. But if rightholders agreed to pay IPAL in the belief, engendered by IPAL's misrepresentation, that IPAL was the IPO or was otherwise connected with the IPO in some official way, this was passing off. The Claimants say that is what happened.
4. The Claimants also allege trade mark infringement by IPAL. The Second Claimant ("BIS") is the proprietor of UK Trade Mark No. 2501843A ("the Trade Mark"), a series mark, the series being two devices in the following form, one blue and one black:


The Trade Mark is registered in respect of, among other things, the following services in Class 45:

On-line information relating to intellectual property; investigation, identification and monitoring of intellectual property; professional consultancy services relating to intellectual property; provision of data relating to intellectual property; advice and information relating to intellectual property; advisory services relating to intellectual property protection."

5. The Claimants further alleged that if either passing off or trade mark infringement was established, Mr Jonasson was liable as a joint tortfeasor. The Claimants sought an account of profits against both IPAL and Mr Jonasson, which was argued at the same hearing.
6. Mr Nicholson appeared for the Claimants. The Defendants had earlier instructed solicitors who appear to have drafted the Defence which was served on 10 December 2014. On 24 April 2015 the Claimants served their Points of Claim in relation to the claim for an account of profits. The Defendants' solicitors came off the record on 26 May 2015. On the same day I heard the case management conference at which the Defendants were neither represented nor appeared. There has been no response to the Points of Claim. At the trial the Defendants were again not represented and nor did they appear.
7. IPAL is a company incorporated in the Seychelles with a registered office address in Mahé, Seychelles. Its website provides a London address in Broadgate Tower, Primrose Street, EC2. There is also a forwarding address in Barcelona and an address in Brussels. Mr Jonasson resides in Stockholm. There were also email addresses used by the Defendants. I was satisfied that they had been properly served with the documents in these proceedings at each appropriate stage, including service which happened after their solicitors came off the record.

Passing off

Whether goodwill subsists

8. The IPO is a government body, part of the Department for Business, Innovation and Skills ("BIS"), although as an executive agency its management and budget are separate from those of BIS proper. It is successor to The Patent Office, established in 1852, which changed its name to 'UK Intellectual Property Office' on 2 April 2007 and on 1 December 2008 to 'Intellectual Property Office'.
9. The goodwill relied on, as pleaded in paragraph 8 of the Particulars of Claim, is:

"goodwill and reputation in intellectual property services, including renewal services, which is exclusively associated in the minds of the relevant trade and public with the names and marks INTELLECTUAL PROPERTY OFFICE and IPO."

10. In a typical passing off case the claimant trades in the usual sense of that word and garners goodwill in its business. However, as Mr Nicholson pointed out, this has not stopped claimants in the form of professional associations, charities and the like from bringing an action for passing off. I considered this aspect of the law in Cranford Community College v Cranford College Ltd [2014] EWHC 2999 (IPEC); [2015] ETMR 7 at [11], albeit briefly since there was no dispute on the point, and concluded that a school in the state sector was entitled to goodwill associated with its name. It seems to me that a government department or executive agency is similarly entitled.
11. The Claimants rely on the statutory and non-statutory services provided by the IPO which facilitate the registration and renewal of IP rights and which promote the enforcement of such rights to encourage creativity and innovation. They also rely on the IPO website which attracts 307,000 hits per month and its helpline which receives about 8,600 enquiries each month. I have no doubt that these activities generate goodwill and that such goodwill is associated in the public mind with 'Intellectual Property Office'.

Ownership of the goodwill

12. Goodwill is personal property. Mr Nicholson explained to me alternative theories of law regarding the ownership of property held by a government department. The short point in the present case is that there are only two candidates: in the persons of the current holders of the office of Comptroller or Secretary of State for BIS. Mr Nicholson thought that it was probably the latter but it makes no difference.

Misrepresentation

13. IPAL's requests for fees were done by means of an official-looking document headed "Reminder". Also at the top IPAL's full name, "Intellectual Property Agency Ltd" is stated, with the Broadgate Tower address, the email address "www.intellectualpropertyagency.org" and a logo:

14. This looks nothing like the logo of the IPO. To my eye, it brings to mind the logo of the Court of Justice of the European Union, but that is by the way. What matters is that the logo and the overall presentation of the "Reminder" document suggest in my view a form emanating from an official source. I doubt that those very familiar with the IP system in this country would be likely to take that source to be the IPO. But I think that others with lives not largely taken up with IP matters might well think that the form comes from the government organisation responsible for intellectual property, the precise name of which they may not have in mind.
15. There is evidence of confusion that has taken place. I was referred to correspondence from a number of parties who received the 'Reminder' document from IPAL.
16. London Letter File Co Ltd agreed to pay IPAL £1,280 to renew its trade mark and was sent an invoice on 14 July 2010. London Letter File contacted the IPO which pointed out that IPAL was not connected with the IPO and that the official renewal fee was £200. On 20 July 2010 G.C. Crowther, Managing Director, sent a letter to IPAL which included this:

"I had in all innocence thought, after checking your website, that you were the official Patent Office agency and was obliged to pay you the exorbitant sum of £1280."

17. Keith Sloan of Itchen Abbas, Hampshire, sent the IPO an email dated 21 October 2012:

"I was sent a form suggesting that I needed to renew my patent.

I naively assumed it was from you and duly signed the order.

I have now received an Invoice for £739 pounds which I have not paid.

As per your website I am sending you copies of the reminder and invoice."

18. On 15 January 2013 Jane Hodge, Accounts Controller of Zennar Limited, a Cornish company trading as Rockfish, sent the IPO an email. In it she said:

"Our company has unfortunately been taken in by a trade mark renewal company calling themselves the Intellectual Property Agency, which of course we took to be the Intellectual Property Office.

We have paid this company an amount of £1280.00 for 4 renewals which should only costs us £350.00. Whilst I realise they have done nothing illegal as we received and returned their reminder and paid their invoice, we only did so as we mistakenly thought we were dealing with yourselves."

19. In April 2013 the IPO received a note from Donna Shannon of Shannon Professional Carpet and Upholstery Cleaning, Abbots Langley, Hertfordshire, which included this:

"Please as per a telephone conversation with your Office, find enclosed a Reminder form that on appearance, I thought was indeed from your Office. The sum of the Renewal figure is the only reason I refrained from signing. I remember this figure being £250 and seemed too long in advance to send a reminder. I went to ring the number on the reminder but while the name of the Company was similar, instinct told me this was not your Office. I otherwise would not have hesitated to sign and return the form in the Envelope provided also by this company."

20. In October 2013 Dr John Bevan of Gosport, Hampshire, paid IPAL £759.00 to renew his patent and later realised that he need not have done so. On 25 November 2013 he sent a letter to IPAL, copied to the IPO:

"I enclose a copy of my letter to your office dated 18.11.13. Please be advised that I have never knowingly agreed to a service other than with the Intellectual Property Office. I therefore dispute your invoice and repeat my request repayment of £759.00."

21. Since the Defendants chose not to defend themselves, none of these individuals was cross-examined to explore their belief beneath the surface of the exhibited correspondence. On the face of Ms Shannon's note it seems there was only momentary confusion on her part. Nonetheless, I think that what I was shown was evidence that rightholders were confused. (I here use the term 'confused' to mean that there was a representation by IPAL, either that it was IPO or that it was associated with the IPO, and that the representation was believed to be accurate by the 'confused' party.)
22. As I have said, once a rightholder responded positively to IPAL's 'Reminder' form, IPAL applied to the IPO to renew the relevant right, though obviously for the much lower official charge. Annexed to the Claimants' Points of Claim in the account was a table listing 946 such applications by IPAL to the IPO to pay renewal fees. Mr Nicholson submitted that there was no credible reason for any of the rightholders to have paid IPAL's elevated fees unless in each case it was done in the belief that the appropriate fee was being paid to the official government body. I was told that generally IPAL's fee was at least five times that actually charged by the IPO.
23. Of the 946 renewal applications by IPAL, 114 failed because the rightholder had already paid the IPO. Mr Nicholson said that the only explanation for these parallel renewal attempts was that in each case the rightholder had responded to IPAL's form by accepting to pay IPAL's fee for renewal, it had realised its mistake and managed to pay the IPO itself before IPAL did.
24. I am not sure that I can necessarily conclude that all 946 positive responses to IPAL's form came about because of confusion on the part of the rightholder. Some of the 114 attempted double renewals might have occurred because of a casual and/or disorganised approach to renewals on the part of the relevant IP proprietors. Indeed, even on the Claimants' case of misrepresentation, it seems the discrepancy in fees was not always huge enough to alert IP proprietors immediately to the scam. Among some of them there seems to have been a remarkable acceptance of gross overcharging.
25. Nonetheless for there to have been no misrepresentation on the part of IPAL, I would have to assume that the rightholder did not believe that IPAL was the IPO (or connected with it) and yet (a) despite never having dealt with IPAL before, the rightholder trusted IPAL sufficiently to engage it as an agent and to pay the sums IPAL demanded to effect the relevant renewals and (b) the rightholder did so without first checking the IPOs fees. I cannot rule out the possibility that this was true of some rightholders. But I do not believe on the balance of probabilities that it was true of a large proportion of them. A large proportion accepted IPAL's misrepresentation that it was the relevant government IP body and paid the fee requested because they took on trust that this was the official fee.

Damage

26. The Claimants, through the IPO, did not suffer damage in the usual way because of IPAL's misrepresentation. Whether rightholders were taken in or not, the IPO was paid the appropriate renewal fees.
27. The Claimants argued that the damage suffered was damage to the reputation of the IPO. Sooner or later rightholders discover that they have been duped, they are angry about it, they believe that the IPO should have known this was going on and should have prevented it from happening. The misrepresentation accordingly harms the IPO's standing in the eyes of that section of the public which uses its services.
28. I accept that inactivity on the IPO's part in preventing a scam is likely to damage its reputation. The public expect to be protected from that sort of thing. Damage of this nature has long been something on which a claimant in a passing off may rely, see Spalding v Gamage (1918) 35 R.P.C. 101 (CA) (appeal on the inquiry as to damages). Of course, the Claimants' succeeding in this action would terminate the damage and thus vitiate the cause of action, but that is true in any passing off proceedings so the Claimants' argument is not circular.

Conclusion

29. In my view the Claimants have established all the elements of passing off by IPAL.

Trade Mark infringement

30. It is alleged that the Trade Mark has been infringed by IPAL's use of the sign INTELLECTUAL PROPERTY AGENCY LTD ("the Sign") pursuant to section 10(2) of the Trade Marks Act 1994.
31. Section 10(2) is equivalent to art.9(1)(b) of Council Regulation (EC) 207/2009, the application of which was recently reviewed by Floyd LJ in JW Spear v Zynga [2015] EWCA Civ 290; [2015] FSR 19:

"[32] Infringement under art.9(1)(b) requires the offending sign and mark to be identical or similar. Infringement occurs where there is a likelihood of confusion caused by the identity or similarity of the mark and sign and the identity or similarity of the goods.

[33] There is much CJEU learning on the interpretation and application of art.9(1)(b). In Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24; [2012] ETMR 17; [2012] FSR 19 at [52] Kitchin LJ approved the following summary of the principles to be derived from the court's jurisprudence:

a. the likelihood of confusion must be appreciated globally, taking account of all relevant factors;

b. the matter must be judged through the eyes of the average consumer of the goods or services in question, 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, and whose attention varies according to the category of goods or services in question;

c. the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;

d. the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements;

e. nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components;

f. and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark;

g. a lesser degree of similarity between the goods or services may be offset by a greater degree of similarity between the marks, and vice versa;

h. there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;

i. mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient;

j. 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; and

k. if the association between the marks causes the public to wrongly believe that the respective goods [or services] come from the same or economically-linked undertakings, there is a likelihood of confusion.

[34] In making the global comparison the sign is to be considered in the context in which it is used. Kitchin LJ made this point in Specsavers [2012] FSR 19 at [87]:

"In assessing the likelihood of confusion arising from the use of a sign the court must consider the matter from the perspective of the average consumer of the goods or services in question and must take into account all the circumstances of that use that are likely to operate in that average consumer's mind in considering the sign and the impression it is likely to make on him. The sign is not to be considered stripped of its context."

32. As appears from paragraph 33(d) and (e) of Spear v Zynga, some components of a trade mark may have more significance than others when comparing it with the sign. In Whyte and MacKay v Origin Wine [2015] EWHC 1271 (Ch); [2015] ETMR 29, Arnold J considered the judgments of the Court of Justice of the European Union in Bimbo SA v OHIM (Case C-591/12 P) EU:C:2014:305; [2014] E.T.M.R. 41 and Medion AG v Thomson Sales Germany & Austria GmbH (Case C-120/04) EU:C:2005:594; [2006] ETMR 13 and said this:

"[18] The judgment in Bimbo confirms that the principle established in Medion v Thomson is not confined to the situation where the composite trade mark for which registration is sought contains an element which is identical to an earlier trade mark, but extends to the situation where the composite mark contains an element which is similar to the earlier mark. More importantly for present purposes, it also confirms three other points.

[19] The first is that the assessment of likelihood of confusion must be made by considering and comparing the respective marks – visually, aurally and conceptually – as a whole. In Medion v Thomson and subsequent case law, the Court of Justice has recognised that there are situations in which the average consumer, while perceiving a composite mark as a whole, will also perceive that it consists of two (or more) signs one (or more) of which has a distinctive significance which is independent of the significance of the whole, and thus may be confused as a result of the identity or similarity of that sign to the earlier mark.

[20] The second point is that this principle can only apply in circumstances where the average consumer would perceive the relevant part of the composite mark to have distinctive significance independently of the whole. It does not apply where the average consumer would perceive the composite mark as a unit having a different meaning to the meanings of the separate components. That includes the situation where the meaning of one of the components is qualified by another component, as with a surname and a first name (e.g. BECKER and BARBARA BECKER).

[21] The third point is that, even where an element of the composite mark which is identical or similar to the earlier trade mark has an independent distinctive role, it does not automatically follow that there is a likelihood of confusion. It remains necessary for the competent authority to carry out a global assessment taking into account all relevant factors."

33. Mr Nicholson submitted that the words INTELLECTUAL PROPERTY OFFICE in the Trade Mark would be perceived by the average consumer as having distinctive significance, separate from the crown device. I agree. While there is a relationship between the two in that the device is presumably there to indicate or underline that the Intellectual Property Office is a Crown agency, this may not be immediately apparent to the average consumer and even when it is, this would not alter the meaning given to the word part of the mark. In my view the principal impact of the mark is the concept conveyed by those words, which are thus the dominant part of the mark.
34. It is therefore appropriate to compare INTELLECTUAL PROPERTY OFFICE with INTELLECTUAL PROPERTY AGENCY LTD and in so doing to apply the principles set out in Spear v Zynga in order to assess the likelihood of confusion between the Trade Mark and the Sign.
35. The visual, aural and conceptual similarities are obvious. Since the conceptual impact of the word component of the Trade Mark is the most important, there would be a significant different between that and the Sign only if the concepts of an Intellectual Property Office and an Intellectual Property Agency were to convey significantly different ideas to the average consumer. Government bodies are sometimes called agencies (e.g. the Environment Agency) and therefore I doubt that there would be any difference perceived by the average consumer. It is true that 'Ltd' conveys the idea of a limited company rather than a government body, but I do not believe that this is sufficient to override an inference of a likelihood of confusion. Moreover, there is actual evidence of confusion, referred to above, which reinforces the likelihood of confusion in the mind of the construct which is the average consumer.
36. I conclude that IPAL has infringed the Trade Mark.

Joint Tortfeasance

37. I considered the law on joint tortfeasance in Vertical Leisure Ltd v Poleplus Ltd [2015] EWHC 841 (IPEC), particularly in the light of Sea Shepherd UK v Fish & Fish Ltd [2015] UKSC 10; [2015] AC 1229. I must be satisfied that Mr Jonasson actively co-operated to bring about the acts of passing off and trade mark infringement committed by IPAL and also that he intended that his co-operation would help to bring about those acts.
38. The Claimants' case in this regard rests on two short propositions. First, Mr Jonasson is the sole director and sole shareholder of IPAL and is the registered owner of its website. Secondly, there is no evidence of any activity of IPAL's other than the acts which I have found to constitute passing off and trade mark infringement. Mr Nicholson argued that the only conclusion that can be drawn on the balance of probabilities is that Mr Jonasson was the individual, in fact the only individual, who took steps to institute IPAL's acts complained of and that he must therefore have intended that those acts would occur. I agree. I find that Mr Jonasson is jointly liable for IPAL's acts of passing off and trade mark infringement.

The Account of Profits

39. I mentioned earlier the table annexed to the Points of Claim. This shows that IPAL received a total of £1,334,234 from rightholders who responded to its Reminder form and paid out £227,724 to the IPO to renew their rights. That translates into a gross profit of £1,106,510.
40. Neither of the Defendants filed a response to the Points of Claim and so they stand admitted. Had there been a response there may have been arguments about deductable costs and the extent to which I should assume that there was passing off and trade mark infringement in every case. Even then, I think the Defendants would have struggled to reduce their liability below the cap of £500,000 allowed in this court.
41. As it is, on the admitted Points of Claim in the account of profits I award the maximum permitted under the IPEC cap, namely £500,000.