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.

Friday, 3 July 2015

Sofa, so good? How to lose both your two trade marks and still come out on top ...

Sitting comfortably?  The Sofa Workshop Ltd v Sofaworks Ltd [2015] EWHC 1773 (IPEC), a 29 June decision of Judge Richard Hacon in the increasingly impressive and cost-effective Intellectual Property Enterprise Court, England and Wales, is impressive not only in its length (123 paragraphs) but also for the fact that the court was able to deal with so many legal and evidential issues in just two hearing days.  For those trade mark practitioners who have imbibed the mantra that, since the big countries in the European Union are quite commercially significant as a proportion of the EU, genuine use of a mark in just one of those countries constitutes genuine use of a CTM, there is something of a surprise in store.

DFS subsidiary Sofa Workshop was a retailer of sofas and other furniture, as was Sofaworks. Sofa Workshop traded under the name “Sofa Workshop” and also owned two Community trade marks (CTMs) for the words SOFA WORKSHOP, which between them covered goods and services relating to various forms of furniture and accessories in Nice Classes 18, 20, 24 and 35. Sofaworks traded under the name “Sofaworks”.

Said Sofa Workshop, given the similarity of trading names and the fact that both businesses were competing in the same market, there was a likelihood of customer confusion. Accordingly Sofaworks both infringed its two CTMs and passed itself off as being associated with Sofa Workshop. No way, said Sofaworks. First, both the CTMs were invalid since the words SOFA WORKSHOP were both descriptive and lacking in distinctive character. Even if they were valid, they were liable to be revoked for non-use on the basis that there had not been a genuine use of those marks within the European Community.

Responding to the allegation of invalidity, Sofa Workshop argued that (i) even if its mark were descriptive and non-distinctive for sofas, that wasn't the case for the other goods for which those marks had been registered, (ii) in any event, its marks had acquired a distinctive character in relation to sofas and (iii) even if its CTMs had not acquired any distinctive character, their specifications could still be appropriately narrowed in order to neutralise the objection by eliminating those goods and services in respect of which they were held not to possess distinctive character.

Judge Hacon delivered a judgment of Arnoldian proportions in which he surprised this Kat and probably more than a few other readers by ruling that the marks were invalidly registered (that's not the surprising bit) and that, if they had been, they would have been liable for revocation for lack of genuine use in the EU (that's the surprise).  However, the last laugh -- if a rather expensive one -- went to Sofa Workshop in that Sofaworks was held liable for passing off.  Taking a closer look at the judgment:

Validity of the CTM registrations

It was not in dispute that the words ‘sofa’ and ‘workshop’, taken separately, had well-established meanings in the mind of the average consumer: a 'sofa' was an item of furniture for sitting on and a 'workshop' was a place where goods are manufactured or repaired and from which they may be sold.

How did the average consumer perceive this combination of words? There was evidence that ‘sofa workshop’ was used as a descriptive term by traders in the sofa business and that another 41 furniture-related businesses in the UK used the word “workshop” in their business names. Sofa Workshop itself used the term ‘workshop’ descriptively in its advertising, to indicate the type of place in which its products were made and also to emphasise the higher quality and greater flexibility in manufacture which was a consequence of the products coming from a workshop. Accordingly both CTMs consisted exclusively of signs which may serve in trade to designate a characteristic of some of the goods for which those marks are registered and were thus invalidly registered.

Had the CTMs acquired distinctive character after they were registered?

There was a great deal of evidence of use of the trade name SOFA WORKSHOP in the UK by Sofa Workshop since 1986. While use of a mark does not necessarily translate into that mark becoming distinctive of the user, in the absence of any other candidate mark by which consumers might identify the origin of the goods or services, the substantial use of a mark is a good start to proving that it has acquired distinctiveness.

This evidence related to use and distinctiveness of the marks in the UK and the judge was therefore satisfied that by 19 May 2014, when Sofaworks filed its counterclaim for invalidity, the mark SOFA WORKSHOP had acquired in the UK a distinctive character in relation to sofas and related goods.

This did not however help Sofa Works. since a mark which is descriptive to a native English speaker is liable to be equally descriptive elsewhere because of the widespread use of English in other Member States of the European Union, including the Scandinavian countries, the Netherlands and Cyprus in addition to Ireland and Malta, where English was an official language. There was no evidence though that the words SOFA WORKSHOP had acquired a distinctive character on account of their use in any of those countries. This being so, there was insufficient evidence to establish validity of the two Community trade marks through the acquisition of distinctive character.

Revocation of the CTMs for non-use

From a review of the case law of the Court of Justice of the European Union (CJEU) and especially the ONEL/OMEL case [Case C-149/11 Leno Merken, noted by the IPKat here], it appeared that the law was as follows: (i) the question of whether there has been ‘genuine use in the Community’ is not to be approached from the perspective of whether there has been use of the mark in more than one, two or any other particular number of EU Member States, since territorial borders are to be disregarded; (ii) a CTM is put to genuine use in the EU where it is used in accordance with its essential function, which is to guarantee the identity of the origin of the goods or services for which it is registered, and used for the purpose of maintaining or creating market share within the Community for the goods or services covered by the mark; (iii) whether the mark has been so used will depend on all relevant facts and circumstances, including the characteristics of the market concerned, the nature of the relevant goods and services, the territorial extent and scale of use, and the frequency and regularity of use; (iv) purely in relation to the territorial extent of use, genuine use in the Community will in general require use in more than one Member State; (v) an exception to that general requirement arises where the market for the relevant goods or services is restricted to the territory of a single Member State.

Here there was no dispute that Sofa Workshop had put its CTMs to genuine use on an extensive scale in the UK in the five year period before the counterclaim for revocation, but there was no evidence that any of Sofa Workshop’s advertising and advertorial publicity was directed at consumers outside the UK even though it was accessible to them, and there was only evidence of one non-UK sale ever being made.  On that basis the CTMs had not been used by Sofa Workshop in the five year period in order to maintain or create market share within the EU for the goods or services covered by the marks. Consequently those registrations were liable to be revoked.

Amendment of the specifications of the CTMs

In the event that the CTMs were valid and should not have been revoked, the proposals for the narrowing of the specification for the goods and services in respect of which they were registered, on the terms suggested by Sofa Workshop, would have been allowed.

Infringement

On the evidence and following an extensive review of the law, it was established that, among a proportion of relevant actual consumers, which was well above de minimis although markedly less than half the total, there existed a belief that, because of the similarity between Sofa Worshop’s CTMs and Sofaworks’ trading name, the respective goods of Sofa Workshop and Sofaworks came from the same or undertaking or from economically-linked undertakings. This being so, at least one essential function of Sofa Workshop’s CTMs -- the guarantee to consumers of the origin of the goods or services -- was materially damaged and would be further damaged if the court did not intervene.

It is probable that the same conclusion applied with regard to the functions of Sofa Workshop’s CTMs as providing a guarantee of quality of their goods and services. Consequently, if those marks had been validly registered and had not been liable to be revoked, they would have been infringed.

Passing off

For the reasons stated in relation to whether Sofa Workshop’s CTMs had acquired distinctive character in the UK, Sofa Workshop had goodwill in its business there which was associated in the public mind with its trading name ‘Sofa Workshop’. Notwithstanding the descriptive qualities of that trading name when used in relation to sofas and related goods and services, it had still acquired a secondary meaning in the mind of the relevant British public in England and Wales, as a badge of origin for such goods and services

As to the proportion of the relevant public to which Sofaworks' trade name must constitute a misrepresentation, this had to be sufficient to cause material damage to the goodwill of Sofa Works, as was the case here. Thus, for the reasons given in relation to infringement of the CTMs, Sofaworks’ use of its SOFAWORKS sign resulted in a representation to a proportion of the relevant public in England and Wales that the goods and services of Sofaworks came from a source which was the same as, or was associated in the course of trade with, Sofa Workshop. That proportion was sufficient for Sofaworks’ acts to cause material damage to Sofa Workshop’s goodwill. It therefore constituted a substantial proportion, that is to say enough to warrant a finding of misrepresentation on the part of Sofaworks. Accordingly Sofa Workshop succeeded in its claim for passing off.

Kat comments

Says this Kat, the judge's position on revocation is one on which many people would like to see the Court of Appeal's view, and there is so much law in this judgment as a whole that it should not be difficult for a reasonably competent lawyer to find some slant, some shade of meaning, some nuance, some verbal formula in which the judge "couched" his ruling that would provide a basis upon which to launch an appeal.  However, it is quite likely that this will not happen.

Sofa Workshop may be content to let the decision go since,  after all, the company won the action on the ground of passing off and it may be best advised either (i) to carry on using its SOFA WORKSHOP, teaching the public to think of it as a trade mark and not as a non-distinctive descriptor in all relevant English-speaking countries and then to re-apply for a CTM on the basis of well-evidenced acquired distinctiveness, or (ii) to focus its use on the UK alone and apply for a national trade mark.

Sofaworks may be content to let the decision go too, since the decision on passing off looks rock-solid and the other issues went in its favour. More significantly, the company has already indicated that it would be easier for it to change its name than to appeal, since its attraction for its customers lies in the store's concept rather than in its (descriptive) name and it has already spent some £500,000 in legal fees when defending these proceedings.

Cat-proof sofa here and here
Cat trapped in sofa here
Cat-friendly sofa here

4 comments:

Barbara Cookson said...

Somewhat surprising then that there is no injunction to prevent the #nealsayswhat advert in The Times and Metro. The Twitterati or a few of them seem to take the part of Sofaworks but it seems a little disrepsectful at the least

Azzy said...

Yesterday's IPEC judgment in The Ukulele Orchestra of Great Britain v Clausen & Anor (t/a the United Kingdom Ukulele Orchestra) [2015] EWHC 1772 (IPEC) is also notable. HHJ Hacon held that a CTM had not acquired distinctiveness because distinctiveness could not be shown in a mere four EU Member States.

Without having revisited the judgment in Leno Merken, my admittedly vague recollection is that these latest judgments appear to be at odds with the earlier judgment. I agree with Jeremy; it would be helpful to get the Court of Appeal's view.

Freddie Noble said...

Barbara, what do you think it actually wrong with the advert? It seems to me that it more or less accurately reports the decision, which of course Sofaworks are quite entitled to disagree with.

Contrast with Apple's "Samsung copied the iPad" statements after losing their RCD case in the Court of Appeal - they were deliberately muddying the waters in terms of what the case was about. Sofaworks are not doing that. Their advert says the case was about confusion (which is basically right) and it says that they lost the case. It impliedly says that they don't think they should have lost, but of course they think that. The advert certainly doesn't contribute to any further confusion, in fact it does quite the opposite - it makes clear that Sofa Workshop is a DFS brand and Sofaworks isn't.

Anonymous said...

Judge Hacon's ruling is surprising. I agree. Does it make sense, though? The CTM owner needs to use the CTM in a way designed to create or maintain a market share in the EU. On that basis, absnet evidence to the contrary, is it likely that use in a single member state for goods in respect of which the market is European is designed to create or maintain a market share in the EU?

The decision raises some interesting points on use in two member states. For instace, what if the CTM is used in Spain and Portugal or the Uk and Ireland? Is that likely to be sufficient or might one argue that a lot of products in the UK are also sold in Ireland and therefore use in these tw countries does not show evidence of the CTM
owner creating or maintaining a market share in the EU?

Subscribe to the IPKat's posts by email here

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