From October 2016 to March 2017 the team is joined by Guest Kats Rosie Burbidge and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Tian Lu and Hayleigh Bosher.

Monday, 30 March 2015

Litigation with friends: a Scramble for Scrabble in the Court of Appeal

It occasionally happens that an important case comes along for which there isn't an available Kat to write a blog-post. Conflicts of interest can take their toll. So it was here, that last week the Court of Appeal for England and Wales handed down a big and keenly-awaited decision in a dispute which, the blog team felt, required a more objective eye and cooler head -- so it was with delight that the IPKat was able to call upon our former feline guest colleague Darren Meale and ask him to do the honours for us.  Thankfully, Darren was able to oblige. This is what he wrote:

Litigation with friends: a Scramble for Scrabble in the Court of Appeal 
This case is about trade marks, and infringement thereof. Mattel makes everyone’s favourite word-forming board game, Scrabble (although this ex-Kat prefers Bananagrams). Zynga, the online social games company, operated SCRAMBLE and SCRAMBLE WITH FRIENDS, games sharing the essential elements of Scrabble. Mattel sued Zynga for trade mark infringement and passing-off. 
Zynga’s sign
Mattel’s Community trade marks (CTMs)
     
SCRAMBLE
SCRAMBLE
SCRABBLE
(and unregistered rights in SCRABBLE)
The rights in play are shown above. This was all about similarity (or otherwise) of marks and signs: Mattel’s registrations clearly covered what Zynga was using its sign for – electronic games. 
At first instance, covered by the IPKat here, Peter Smith J (English judges usually only get a surname – unless there is another judge around with the same one, like, in this case, Sir Andrew Smith) dismissed almost all of Mattel’s claims: there was no infringement of Mattel's two SCRABBLE marks (and no passing off) by the use of SCRAMBLE or SCRAMBLE WITH FRIENDS. Although Mattel's SCRAMBLE mark was infringed, it was invalid and/or liable to be revoked, because it consisted of a sign which may serve in trade to designate a characteristic of the goods, had become customary in the language or in the bona fide practices of the trade and had become the common name in the trade for a product in respect of which it was registered. The only success for Mattel at first instance was in respect of Zynga’s logo – the twisted “m” made the logo look like a “b”, said the trial judge, meaning that it read SCRABBLE, so it was an infringement of Mattel’s SCRABBLE CTMs. Overall, a win for Zynga.
Both sides appealed. On Friday, Floyd LJ gave the leading judgment (with which Patten and Tomlinson LJJ agreed) in JW Spear & Sons Ltd & Others v Zynga Inc [2015] EWCA Civ 290. This time, Mattel came out on top, with a review of the trial judge’s judgment that could readily be described as excoriating. The validity of its SCRAMBLE CTM was reinstated and the finding of infringement by Zynga’s SCRAMBLE and SCRAMBLE WITH FRIENDS signs stood. There was still no infringement or passing off so far as SCRABBLE v SCRAMBLE was concerned, however. Zynga’s consolation prize was a finding that, in fact, its twisted “m” logo did not infringe on Mattel’s SCRABBLE rights.
In justifying its interference with the trial judge’s findings, the Court of Appeal stated that 
“By focusing, almost to the exclusion of everything else, on the attitudes and actions of the two protagonists to the dispute, it seems to me that there is force in Mr Silverleaf's submission that the judge has lost sight of the underlying exercise which the jurisprudence of the CJEU required him to undertake… perhaps the most telling indication of the extent to which the judge had not fulfilled his basic task is the length of Zynga's respondent's notice, which invites the court to uphold the judge's judgment on the basis of a long list of matters about which the judge made no factual findings at all”.
The following five questions were addressed in the appeal judgment:
1.       When considering infringement, can a trade mark owner rely on contextual matter extraneous to the mark?
2.       Is there a minimal threshold of similarity required before the Court is empowered to consider whether there is a likelihood of confusion?
3.       Was SCRAMBLE descriptive or generic?
4.       Was there infringement of the SCRAMBLE CTM by SCRAMBLE and SCRAMBLE WITH FRIENDS?
5.       Was there infringement of the SCRABBLE CTMs by SCRAMBLE and SCRAMBLE WITH FRIENDS?
I deal with each below, but first, a few facts.
A few facts
SCRABBLE launched in the EU in 1954. By 2010 over half of UK households owned a SCRABBLE game. Half a million people outside North America play Scrabble on Facebook. 2.4 million people have downloaded the SCRABBLE app for iOS. Zynga started in 2007 and is now the world’s largest social gaming company. SCRAMBLE launched in 2007 as a Facebook game and evolved over time. SCRAMBLE WITH FRIENDS arrived in June 2012 by which time it was very similar in game-play to SCRABBLE.
1.       The context question
When considering infringement, can a trade mark owner rely on contextual matter extraneous to the mark? Only to an extent, holds the Court of Appeal.
It was common ground that the context in which the allegedly infringing sign is used has to be taken into account: see Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24. But what about the context in which the proprietor’s mark is used?
Mattel wanted to rely upon features such as the fact that they had used SCRABBLE together with tiles, numbers and premium word scores and a "woodland green" background colour (which sounds like a hybrid trade mark and passing-off claim), and it was rejected by the Court of Appeal. The idea had already been so rejected in L'Oréal v Bellure [2007] EWCA Civ 968, but in a referral by the Court of Appeal in Specsavers, the Court of Justice of the European Union (CJEU) held that where a mark registered in black and white had been used in a particular colour combination and the public had become aware of such colour combination, it would be illogical to disregard that awareness when assessing likelihood of confusion. Thus some extraneous matter, beyond the mark as registered, could be taken into account. Floyd LJ described the Specsavers principle as allowing consideration of the use that had been made of the mark itself in a colour or colour combination. Mattel sought to develop the Specsavers principle further, to include what Floyd LJ described as “matter which has been routinely and uniformly used "in association with the mark”. No, said Floyd LJ, that was to take Specsavers too far.
2.       The threshold question
Is there a minimal threshold of similarity required before the court is empowered to consider whether there is a likelihood of confusion? No, holds the Court of Appeal.
This came up because Peter Smith J had held that SCRABBLE was not similar to either SCRAMBLE or SCRAMBLE WITH FRIENDS, a decision which seemed odd to me. How can two words differing by just one letter, in the middle, not be similar at least to some degree?
Back in L'Oréal v Bellure NV [2006] EWHC 2355 (Ch), the High Court had held that there was no minimum threshold of similarity. It was a question of degree. The Court of Appeal reviewed four CJEU decisions which Zynga said cast doubt on L'Oréal: Riha Weser-Gold, Ferrero, Lufthansa Airplus and Kaul. Those cases did not change the conclusion reached in L'Oréal. Instead they suggested the following (paragraphs 58 and 59 of Floyd LJ’s judgment):
“Thus I do not consider that any of these cases provides direct authority which suggests that there is a minimum threshold of similarity. The cases suggest instead that overall similarity is a binary question. Where there is some overall similarity, even faint, then it is necessary to carry out the global assessment, taking account of all relevant circumstances. Moreover, in such cases, the enhanced distinctive character of the mark may play a role in increasing the likelihood of confusion.
On the other hand the cases do show that the General Court has said that where there is (a) average visual and phonetic similarity, but no conceptual similarity (Wesergold), or (b) a number of visual and phonetic features which precluded the signs from being perceived as similar (Ferrero), or (c) no visual or phonetic similarity but a low degree of conceptual similarity (Lufthansa), or (d) a common suffix (Kaul), there may yet be no similarity overall between mark and sign. I have no difficulty with these conclusions: it is only overall similarity which counts.”
3.       Was SCRAMBLE descriptive or generic?
Zynga argued that the SCRAMBLE CTM consisted of a common word in English meaning (i) to move with urgency or panic (ii) to struggle eagerly or unceremoniously for possession of something and (iii) to get or gather something with difficulty or in irregular ways. Secondly, it was asserted that it had been commonly and extensively used by third parties, both before and after the date of registration, in relation to a range of physical and electronic board games where the user is required to make one or more words from scrambled letters. As Floyd LJ put it, there were two alleged meanings of SCRAMBLE, "the rushed activity meaning" and "the jumbled letters meaning".
At first instance, Peter Smith J invalidated the SCRAMBLE CTM because, he held, it was descriptive of what was required in the Zynga game - namely a scramble for words made up by letters in a fixed period of time and because "SCRAMBLE" was in common use for word games in apps for these types of game.
Floyd LJ addressed the two alleged meanings. He looked at evidence of the use of the term “word scramble” in the United States. He looked at an American game SCRAMBLE!, a 1977 book which detailed a pen and pencil game could “Scramble” and a 1975 book talking about “Word Scrambles”. But overall he was not convinced, and concluded that “Although there is quite a degree of descriptive allusion in the mark SCRAMBLE, I do not regard its impact as being so far towards the descriptive end of the spectrum that it was unregistrable” as being descriptive. So far as it having become a customary or common term was concerned, he held that the evidence did not come near to establishing that, as of 2007, there was any customary use or established practice in relation to "scramble" in the EU.
With those findings, the Court of Appeal reversed the first instance decision and upheld the validity of the mark. It is always easy to say such a thing as a commentator, but for my part I do not understand how Peter Smith J could have found, on the evidence before him, that SCRAMBLE had become a customary or common term for word games. The descriptive allusion is there, but it is far weaker than it needs to be to render the mark invalid.
4.       SCRAMBLE v SCRAMBLE and SCRAMBLE WITH FRIENDS
The Court of Appeal agreed with Peter Smith J. This one was a no-brainer: confusion was not just likely, but inevitable. The addition of WITH FRIENDS would not be adequate to avoid confusion. With Mattel’s CTM now back to life, Zynga infringed it.
5.       SCRABBLE v SCRAMBLE and SCRAMBLE WITH FRIENDS
The Court of Appeal agreed with Mattel that Peter Smith J’s conclusion that SCRABBLE and SCRAMBLE were not similar “cannot be supported” [at this point Merpel sighs “That’s a relief!”, as does just about every trade mark practitioner in the EU]. Instead, held Floyd LJ, there was an obvious degree of visual, phonetic and conceptual similarity between the two marks.
However, he was not moved to find a likelihood of confusion. He reviewed all of Mattel’s evidence in this regard, much of it coming from the Internet – tweets and game reviews/comments in which people appeared to mix up SCRAMBLE and SCRABBLE. One example was "My mistake – Scramble IS the right word for the game I was thinking of … thought it was Scrabble". But he also took into account the extent of side-by-side use of mark and sign. Zynga's use of SCRAMBLE had been extensive and pervasive. Floyd LJ said that there was an obvious argument that, if there was real likelihood of confusion between mark and sign it would have come to light by the time of the trial to a very great extent. In the end, this argument convinced him, and he concluded:
“I am not persuaded that it gives sufficient support to Mattel's case to justify allowing the appeal on infringement of the SCRABBLE mark. The principal reason for that conclusion is that the extent of side by side use would be expected to have produced far more abundant evidence of confusion by the date of trial.”
Floyd LJ also held that there was no infringement in respect of the twisted “m” in the SCRAMBLE WITH FRIENDS logo. Peter Smith J had employed a “quick glance” test, holding that “it is possible (as some of the evidence showed) that a quick casual look would give the impression that the word is not "Scramble" but "Scrabble" with a B on its side”. That was not the test, held Floyd LJ. If the average consumer really read the “m” as a “b”, there should be more evidence of actual confusion. In its absence, he overturned Peter Smith J and found no likelihood of confusion.
He then went on to dismiss quickly Mattel’s claim based on its reputation for SCRABBLE as he was not persuaded that Mattel had proved that unfair advantage had been taken of, or detriment to the distinctive character or repute had been caused to, the SCRABBLE CTM.
A note on Mattel’s “tile” CTM
This was originally relied upon by Mattel alongside its word marks, but by the time the case came to trial it had been separately declared invalid by both the High Court and the Court of Appeal.
A final remark or two
There’s nothing particularly ground-breaking about this dispute. The Court of Appeal declined to push the boundaries of the contextual analysis permitted by Specsavers. It also reversed several of Peter Smith J’s more surprising findings, including that SCRAMBLE and SCRABBLE are dissimilar, a decision which I wouldn’t expect any self-respecting trade mark lawyer in the land would agree with. Ultimately, Mattel won the case because it had a CTM for SCRAMBLE covering electronic games and Zynga used the sign SCRAMBLE for electronic games. Shame it took the parties three years, 14 court days and no doubt hundreds of thousands of pounds in costs to work that out.
Something unsatisfactory remains about the Court of Appeal’s decision –- most trade mark practitioners, if asked, would advise that SCRAMBLE used for electronic games would infringe a CTM for SCRABBLE used for electronic games -- the marks are obviously orally and visually very similar, with some conceptual differences known to English speakers, but not many throughout the EU, and the goods are identical. While Mattel appears to have won overall, it probably ought to have won on this point as well, particularly given the enhanced protection available to a mark with reputation.
Thanks, Darren!

2 comments:

I prefer Ruzzle said...

What happens now? Will Zynga rebrand?

Ashley Roughton said...

Wonderful piece Darren - very readable and I like. Combination of interest and amusement throughout. TY. Ashley

Subscribe to the IPKat's posts by email here

Just pop your email address into the box and click 'Subscribe':